Easing Rate Worries, Stocks Rise & Yen Falls – Asia Market Wrap

Global stocks gained and the Yen sank after the BoJ’s deputy governor indicated it would not hike interest rates if markets remain volatile, assuring investors alarmed by the country’s recent currency surge.

Japanese stocks rose after the Yen plummeted by more than 2% versus the Dollar, highlighting the benefits of a cheaper currency for an export-orientated economy. The broad Asian markets index rose 1.9%, while US futures also rose. Treasury rates rose.

The latest revival of risk appetite came after BoJ Deputy Governor Shinichi Uchida delivered a strong dovish signal, stating that the central bank’s rate path will change if market conditions affect the economic outlook. His comments came after Japan’s government and central bank attempted to display a united front in order to restore market calm in the aftermath of rising criticism of last week’s unexpected monetary tightening measures.

Uchida was attempting to calm markets after the BoJ abruptly tightened policy on July 31 and signalled a more aggressive rate hike path than some traders had anticipated. The rate hike triggered a three-day drop in Japanese stocks, a jump in the Yen, and a quick unwinding of the currency carry trade, dragging down risk assets globally.