• Asian shares mixed; Nikkei up 2.5% after BOJ
• Japan’s Nikkei ends at one-month high after BOJ stands pat
• China stocks subdued ahead of Lunar New Year holidays
• Indian shares hit over 1-wk high as metals gain
• Australian shares post 8-1/2-month closing high on tech, healthcare boost
• South Korean shares fall as institutional investors book profits

Japan: Largest Market Mover-BOJ Policy Meeting

• BOJ defies market bets for policy tweaks, sending yen tumbling
• BOJ keeps interest rate targets, yield band intact
• BOJ ramps up market operation tool, signal status quo on YCC
• Board raises inflation forecasts but cuts growth projections
• Japan nearing phase where monetary easing can be stopped– trade minister
• Japan’s core inflation hits fresh 40-year high
• BOJ’s yield curve defense

The Bank of Japan on Wednesday maintained ultra-low interest rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme in the wake of rising inflationary pressure.

    The surprise decision sent the yen skidding against other
currencies and bond yields tumbling the most in decades, as
investors unwound bets they made anticipating the central bank
would overhaul its yield control policy.

    Instead of overhauling its stimulus programme, the BOJ
crafted a new weapon to prevent long-term rates from rising too
much – a move some analysts took as a sign Governor Haruhiko
Kuroda will hold off on making big policy shifts during his term
that ends in April.

    At a two-day policy meeting, the BOJ kept intact its yield
curve control (YCC) targets, set at -0.1% for short-term
interest rates and around 0% for the 10-year yield, by a
unanimous vote.

 The central bank also made no change to its guidance that
allows the 10-year bond yield to move 50 basis points on either
side of its 0% target. -Reuters

Market reaction

We saw US indices and USD move sharply higher against the yen on the announcement, most of this move has been erased in the indices, and USD has reversed and moved sharply lower.

US Data Today

Commodity headlines overnight

Copper

Glencore copper mine in Peru running at ‘restricted’ capacity due to protests

Antofagasta 2022 copper output down 10%, 2023 guidance unchanged

Trafigura plans to take large amounts of LME copper

Oil

Guyana expects a proposal from India for long-term crude purchases