Japan Stocks fall on profit booking

The Japan share market finished session lower on Tuesday, 21 January 2020, with most sectors falling, as investors opted to lock in gains after the Bank of Japan's (BOJ) kept its policy unchanged on Tuesday and after the International Monetary Fund (IMF) lowered its global growth predictions for 2020 and warned that geopolitical tensions in the Middle East could impact global oil supplies. At closing bell, the 225-issue Nikkei Stock Average declined 211.77 points, or 0.88%, to 23,871.74, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 8.97 points, or 0.51%, at 1,735.19.

The International Monetary Fund trimmed its growth forecasts for 2019 and 2020 to 2.9% and 3.3%, respectively, and 3.4% in 2021. IMF expects that the global economic outlook remains sluggish despite a slightly improving world economy and warned that geopolitical tensions in the Middle East could impact global oil supplies. The Middle East and Central Asia is expected to record 2.8% growth in 2020, slightly lower than the IMF's October outlook and reflecting a downward revision to Saudi Arabia's oil output following last month's decision by the OPEC+ group to extend supply cuts. It expects the region to pick up speed in 2021 with growth of 3.2%.

 

ECONOMIC NEWS: The Bank of Japan kept its short-term deposit rate unchanged at minus 0.1% and its target for 10-year Japanese government bond yields at around zero on Tuesday. In its quarterly report, the BOJ's policy board said it expects the economy to grow 0.8% in the year ending March 2020, compared with a forecast of 0.6% in the previous report in October. It expects 0.9% expansion in the year ending March 2021, compared with an earlier forecast of 0.7%. Last month, Prime Minister Shinzo Abe's cabinet approved a $120 billion stimulus program, designed to help recovery from a typhoon in October and address downside risks to the economy. The BOJ expects core consumer prices, excluding fresh food, to rise 1.4% from a year earlier in the year ending March 2022, compared with a 1.5% projection for that year made in October and lower than the bank's 2% target.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, appreciated against a basket of currencies. The Japanese yen traded at 109.95 against the dollar after touching an earlier low of 110.21.

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