Bank of Japan Minutes to Drive the Markets This Week

Asia is expected to provide most of the market volatility during this week’s trading. The main focus is on the Bank of Japan (BOJ), which is scheduled to provide crucial minutes on the interest rates this coming Friday. Japan economists suggest that the BOJ may make alterations to the policy rate balance, with the current -10bps expected to be shaved down to -20bps. There had been earlier hints that Japan would increase its purchasing activities in the EFTs and J-REITs sector. Projections show that the EFTs may be boosted to an annual rate of 6 trillion Yen and the J-REITSs to climb to 180 billion Yen.

On the monetary policy, the BoJ Governor Kuroda is supposed to give answers on lingering problems regarding the BoJ’s stand on experimenting with ‘helicopter money’. An outright denial that the BoJ will apply ‘helicopter money’ would give a more stable outlook because the Yen had slightly declined due to jitters about the radical money scheme. Wider market expectations seem to have a consensus that a -30bps policy rate is an ideal figure to work with even though -20bps should be the bear minimum, if the monetary base is pegged at ¥80. Policy easing and a little increase in the ETF purchases is so far the most likely outcome of the Friday minutes.

Asian markets remained flat during Monday trading

The Asian markets were dull on Monday, with the Topi index dropping 2.15 points (0.16%) to settle at 1,325.36. The broader Nikkei 225 index remained flat, posting 16,620.29. The rest of Asia also experienced very modest movements with Australia’s ASX 200 gaining 0.64% (up 35.41 points) to close at 5,533.60. ASX 200’s finance sub index gained 0.55%. South Korea’s Kospi gained 0.1 percent higher at 2,012.32, a gain of 1.98 points. The Hong Kong’s Hang Seng index was the worst performer in Asia, dropping 0.19 percent with last week’s profit taking apparently carrying on into Monday’s trading.

China’s mainland markets looked slightly upbeat as the Shanghai Composite gained 3.98 points (0.13%) and the Shenzhen Composite remaining flat, closing at 2,019.81.

Better than expected import – export data from Japan

Japan’s economy reacted to better than expected export data released right before the trading opened. The Japan export data showed a 7.4% drop in June (YoY), officially making it a ninth consecutive drop. The earlier projections had been a drop of 11.6 percent. If examined purely on volumes, the data shows a volume increase of 2.9 percent over the same period, marking the first gain in four months. The imports however dropped to 18.8 percent, also a better release than the forecasted 19.7 percent drop. As a whole, Japan still maintains a surplus of 692.8 billion yen versus the 494.8 billion Yen forecast.

The Nintendo effect is still moving the Japanese market

It is not so often in the finance world that gamers get the bigger say in the financial world, but it seems to be happening right now. Nintendo shares fell 18% during Monday trading. That marks an end to the company’s epic rise two weeks after the launch of the Pokémon Go. The shares dropped after the company advised investors that the smartphone game has experienced wild success, but it does not make have that great an impact on Nintendo’s general profits. Nintendo shares had doubled in price just two weeks after Pokémon Go’s release and made it the highest-grossing application in most of the countries where it was launched. .