Asian markets were mixed on Tuesday, with Tokyo’s Nikkei falling and the yen strengthening as dealers were left disappointed by the Bank of Japan’s plan to boost the economy.
After a two-day meeting the central bank said it would adopt a two percent inflation target that had been demanded by the country’s new government while also launching an open-ended asset-purchase scheme.
Tokyo enjoyed an initial and brief surge after the announcement, jumping into positive territory, but it soon fell back as investors read the details.
The Nikkei index ended 0.35 percent, or 37.81 points, lower at 10,709.93.
Seoul gained 0.49 percent, or 9.66 points, to 1,996.52, while Sydney was flat, nudging up 1.6 points to 4,779.1.
In the afternoon Hong Kong was 0.18 percent higher, while Shanghai fell 0.53 percent.
The Japanese central bank also lifted its growth forecast for the country’s economy, predicting gross domestic product would expand 2.3 percent in the year ended March 2014, up from an earlier 1.6 percent estimate.
Abe and his Democratic Party of Japan swept to power in the poll and has since moved to bring BoJ policies into line with his new government’s position.
Dealers have been betting on fresh easing by the bank to boost the economy, while there were also expectations it would fall into line with Tokyo’s inflation target demand.
The dollar and euro also enjoyed a quick surge against the yen but the advances were soon reversed.
In afternoon trade the dollar, which on Friday in New York hit 90.24 yen — its highest since June 2010 — bought 89.22 yen in Tokyo against 89.50 yen late in Europe Monday.
The euro bought 119.29 yen from 119.20 yen while the single currency bought $1.3369 against $1.3320.
US markets were closed on Monday for a public holiday.
“The initial bullish market move was due to impulse buying, as the BoJ’s policy seemed on the surface to meet all the right expectations,” Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Dow Jones Newswires.
However, Fujito said the announcement was “a fairly big disappointment” as the easing was put off until 2014 and there was no expansion in government bonds to be bought.
And Wee-Khoon Chong, senior interest rate strategist at Societe Generale in Hong Kong, said the news was “pretty much in-line with expectations. There was not much of a surprise as most of it was already well telegraphed in advance”.
Oil prices were mixed, with New York’s main contract, light sweet crude for delivery in February, down a cent at $95.55 a barrel in the afternoon while Brent North Sea crude for March gained 34 cents to $112.05.
Gold was at $1,693.49 at 0700 GMT compared with $$1,688.89 late Monday.
In other markets:
Taipei rose 0.44 percent, or 34.18 points, to 7,759.1.
Taiwan Semiconductor Manufacturing Co was 0.50 percent higher at Tw$101.0 while leading integrated circuit design house MediaTek added 0.63 percent to Tw$318.5.
Wellington was flat, edging up 1.90 points to 4,187.08.
Telecom added 0.21 percent to NZ$2.365, Contact Energy was unchanged at NZ$5.17 and Fletcher Building was down 0.11 percent at NZ$9.29.