Japan Nikkei dives 2.46%

The Japan share market closed session at lowest in three and a half year on Monday, 16 March 2020, as the Bank of Japan's emergency pledge to boost buying of Exchange Traded Funds (ETF) by up to double current levels failed to calm investor nerves. Four-fifth of the 33 sector sub-indexes on the Tokyo Stock Exchange traded lower, with rubber products, transport equipment and electric machinery being notable losers. At closing bell, the 225-issue Nikkei Stock Average stumbled 429.01 points, or 2.46%, to 17,002.04. The broader Topix index of all First Section issues on the Tokyo Stock Exchange sank 25.36 points, or 2.01%, at 1,236.34.

Investors watched for market reaction to the Fed's latest actions. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0%-0.25% down from a target range of 1% to 1.25%.

 

Following the Fed's announcement, the Bank of Japan announced on Monday steps such as the active purchase of exchange-traded funds and Japan real estate investment trusts to contribute to supporting economic and financial activities. The BOJ said it could buy about 12 trillion yen (S$160.3 billion) of ETFs, in a footnote to its statement. it also said it will continue buying ETFs at around 6 trillion yen annually in principle.

ECONOMIC NEWS: Japan Core Machine Orders Climb 2.9% On Month In January--Japan total value of core machine orders climbed a seasonally adjusted 2.9% on month in January, the Cabinet Office said on Monday, coming in at 839.4 billion yen, following the upwardly revised 11.9% decline in December (originally -12.5%). On a yearly basis, core machine orders eased 0.3% following the 3.5% decline in the previous month. Core machine orders for the first quarter of 2020 are expected to fall 2% on quarter and 0.6% on year to 2,518.8 billion yen. Manufacturing orders were up 4.6% on month and 0.1% on year to 380.3 billion yen, while non-manufacturing orders fell 1.7% on month and 0.6% on year to 460.7 billion yen. Government orders skyrocketed 87.8% on month and 59.5% on year to 392.7 billion yen, while overseas orders gained 9.1% on month and 3.2% on year to 867.1 billion yen.

CURRENCY NEWS: The Japanese yen, often seen as a save-haven in times of economic uncertainty, traded at 106.31 per dollar from lows around 108 seen late last week.

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