Asia Shares Surge as BOJ Eases Further; Solid Earnings Boost Nikkei

The major Asia-Pacific stock indexes jumped on Monday after the Bank of Japan (BOJ) announced more stimulus steps to help cushion the economic impact of the coronavirus, but gains may have been limited by another drop in crude oil prices as the global storage facility shortage raged on.

Quick analysis of the BOJ’s monetary policy decisions show central bank policymakers matched market speculation by pledging to buy unlimited amounts of government bonds, removing its previous target of 80 trillion yen per year. The BOJ also raised purchases of corporate and commercial debt, and eased rules for what debt would qualify.

At 05:40 GMT, Japan’s Nikkei 225 Index is trading 19784.50, up 522.80 or +2.71%. Hong Kong’s Hang Seng Index is at 24283.67, up 452.34 or +1.90% and South Korea’s KOSPI Index is trading 1924.98, up 35.97 or +1.90%.

China’s Shanghai Index is trading 2826.77, up 18.24 or +0.65% and Australia’s S&P/ASX 200 Index settled at 5309.50, up 66.90 or +1.28%.

Nikkei Gains on Upbeat Earnings

Japanese shares rose on Monday as some better-than-expected earnings lifted sentiment even as underlying worries about the outlook tempered overall demand.

The gains came just before the BOJ’s widely anticipated decision to further expand monetary stimulus.

The benchmark Nikkei average was up about 1.2% by the midday break, then surged after the BOJ announced measures to ease corporate funding strains, including increased buying of commercial paper and corporate bonds.

Advantest Corp. jumped 8.2% after the chip-testing equipment supplier forecast at 14.2% year-on-year increase in operating profit for the April-June quarter.

“Even with difficult external conditions, Advantest expects steady growth in test demand and aims to sustain and expand market shares in 5G milliwave and high-end memory areas,” said Jefferies analyst Masahiro Nakanomyo.

Fanuc Corp. surged 11.1% even though the factory automation company didn’t disclose the full-year profit guidance and gave a forecast for the April-September half instead, saying the impact from the coronavirus lockdowns at major cities will materialize from March.

Traders said volume was below average as investors stayed on the sidelines ahead of key policy meetings of the U.S. Federal Reserve and the European Central Bank this week.

Aussie Shares Rebound Despite Fears of Banks Dividend Cuts

Australian shares are having another volatile day as investors digest the ongoing impact of COVID-19 on their dividends.

The biggest drag on the market were the big four banks after NAB slashed its dividend and revealed a 51 percent slump in the first-half profit. NAB is also in a trading halt as it is trying to raise an extra $3.5 billion by issuing new shares.

In other news, Australia is expected to fall into recession while unemployment, bankruptcies and bad debts are expected to surge. This does not bode well for the banks’ earnings, and investors are worried the financial giants will be forced to reduce, or even cut, their prized dividends.

“We predict the current recession will be five times deeper than a typical recession, but last as long as a typical recession,’ said Commonwealth Bank’s head of international economics, Joseph Capurso.