The turbulent situation Japan's banking sector is likely to impact global markets. A leading hedge fund manager says that collapse in the Japan's banking industry blindsides the market, while shrugging off any possibility of banking crisis in the world's third largest economy.
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Through a surprise move, Bank of Japan has adopted negative interest rate aiming to force the banks in investment. Meanwhile, the negative economic outlook has compelled the commercial banks to squeeze their investment portfolios while diminishing the BOJ move. Analysts have forecast for unchanged monetary policy in Tuesday’s meeting while predicting for a major change in April.
Global stocks rose further as increased investor confidence propelled buying support. Investor confidence has been strengthened after the announcement of European Central Bank's stimulus plans and encouraging US economic data.
Japan's regional banks are enhancing unsecured retail lending as it offers high profit margins. Loans on mortgage and small firm borrowing are declining. Japan banks are suffering from ultra-low interest rate regime to increase revenues.
Encouraging gains on Wall Street were propelling up stocks in Asia and Australia. Barring Hang Kong and Japan, all the major market benchmark indices in Asia and Australia, rose.
US Dollar has been witnessed to gain some value against yen in both Tokyo and Japan on Monday. The appreciation of dollar has taken place due to BoJ’s surprise move for slashing the interest rate to (-) 0.1%. Even BoJ Governor has hinted further rate slashing events, if situation demands. But economists have referred the attempt as an attraction drawing stance aiming to prevent yen from rising to boost up the sluggish economic growth.
It seems like Japanese retailers are saying not to believe in official statistics on consumer spending as stores cut earnings forecasts and expects a lackluster consumer spending, which is an important factor in the growth of Japan during a time of declining exports and factory output.
Forecasts about price swings in Yen against the euro are becoming stronger as investors bet that Bank of Japan (BoJ) will also make dovish rhetoric to match European Central Bank (ECB).
Despite down 12.7 percent from the 52-week high of 20,952.71 points, Japan's Nikkei offered 27.89 percent return for 2015 so far and the last two sessions of the previous week further indicated the upward momentum in the market.
The reduction in consumer spending and drop in exports are squeezing the world's third largest economy. During April-June quarter, exports from Japan eased putting further pressure on the Japanese economy, which slowed down at 1.6 percent annual growth rate as against the forecast of 1.9 percent.
The Bank of Japan said it expects factory output to fall for the first time in three quarters in April-June on weak Asian demand, underscoring the fragile nature of the economic recovery.
Bank of Japan Governor Haruhiko Kuroda said the yen's current weakness was not inflicting severe pain on the economy, toning down an earlier warning to markets against pushing the currency too far down.
The New Zealand dollar slumped 2.5 percent against the U.S. dollar on Thursday, hitting a five-year low after the Reserve Bank of New Zealand surprised some by cutting interest rates and flagging the chance of more easing.
The yen surged to a two-week high against the dollar on Wednesday, after the head of the Bank of Japan said the currency was unlikely to fall further because it was already "very weak", prompting investors to trim huge bets against the yen.
Asian stocks pulled back from a seven-year peak scaled on Tuesday as sentiment gave way to caution ahead of the Federal Reserve's policy two-day meeting scheduled to start later in the session.
