Nikkei Rises on Weak Yen – US equities close lower


The Nikkei index rallied on Tuesday’s trading session after exports and financials were boosted by a weak Yen. Asian trading session was mostly thin on account of Chinese New year holiday.

The MSCI Asia Pacific Index outside Japan gained 0.2% after three days of posting losses. The Nikkei 225 index gained 1.9% while the ASX200 was mostly flat. South Korea’s Kopsi dropped 0.3% erasing its gains.

Asian markets were relatively flat on Monday’s open as China was closed for the Chinese New Year celebrations.

Tuesday’s trading session saw the Nikkei rise against a weak Yen with exporters leading the way. Rising close to 2.4%, the Nikkei saw a boost after the US treasury officials voiced their support for Japan’s monetary policy, which some see as being aggressive, but required to combat deflation and to boost growth in the region.

The US Dollar was trading at 94.22 Yen marking the highest rally since May 2010’s 94.46. The Euro was trading at 126.28 as the Yen dropped 2% against the Euro on Monday’s trading session.

US equity markets closed lower on Monday on a light trading day without much of economic news being scheduled. Comments from Fed vice-chair Janet Yellen on the monetary policy saw markets edging lower by close of Monday’s trading session.

Among the US equities, S&P500 and the Nasdaq closed 0.06% lower while the Dow Jones dropped 0.16%.

Federal Reserve vice Chair, Janet Yellen remarked that policy makers might continue to follow a loose policy even after the employment and inflation target objectives are met. Under the current monetary easing program, the Federal Reserve purchases $85 billion of long term securities every month in an effort to bring down the unemployment rate to 6.5%.

Across Europe, most equity markets saw modest gains as the Euro group finance ministers meet, with Greece and Cyprus topping the agenda along with the point of discussion being the strong euro rally. Opinion seems to be divided as few weeks ago France called for a coordinated approach to the currency rate with German opposing the idea stating that a weaker Euro is likely to trigger inflation.

The EUR saw a mild rally as the meeting commenced. London’s FTSE100 gained 0.21% while the German DAX was down 0.24% and the CAC40 was flat. Against the Dollar, the Euro rallied to 1.3417 after dropping on Friday to 1.3361. On the London Bullion Market, Gold dropped to $1652 to an ounce.

Ratings agency, Standard&Poor’s revised its outlook on Ireland, upgrading from ‘negative’ to ‘stable’ to BBB+. The revised outlook allows Ireland to be financed exclusively via private funds. Irish yields maturing in 2017 eased to 2.76% on Monday, compared to last week’s 3.02%.

Meanwhile from the UK, the ONS is expected to release inflation data this morning for December. It is expected that the rate of inflation might have fallen in December, while the annual rate is expected to be unchanged at 2.7%. Later on Wednesday, the BoE will also be publishing their quarterly inflation report. In its statement last week, BoE officials said that they will continue to judge the economy which is slow but showing signs of sustained recovery.