Malay Mail Online – February 29, 2016 ― The yen strengthened as investors digested the Group of 20’s statement on the global outlook, after Japan’s currency and monetary policy were singled out as a source of concern by some ministers at the meeting. New Zealand’s dollar retreated.
After weakening the past three sessions, the yen climbed 0.3 per cent in early Monday trading. Futures on Japan’s Nikkei 225 Stock Average also signalled gains. The kiwi dropped for a second day after data showed the turmoil in global markets this year has hit business confidence and building permits dropped for the first time in four months. US shares ended last week on a down note, falling as crude oil pared back some of its best weekly gain since August. Australian and New Zealand government bonds declined today.
Finance ministers from the world’s biggest economies didn’t provide the coordinated stimulus plan some investors had hoped for in Shanghai, with the G20 communique committing governments to do more when it comes to supporting growth. Japan’s most recent round of monetary easing was a focus, amid concern it could spur a round of competitive currency devaluations, said Eurogroup chief Jeroen Dijsselbloem. Markets have been gripped by volatility since the start of the year as concern over China’s slowdown and gyrations in local trading melded with anxiety over oil’s selloff to foster a sense of turmoil.
“The G20 communique basically says the world is not as bad a place as markets think and if it gets worse we will use fiscal, monetary and structural policy aggressively to fix it,” Steven Englander, Citigroup Inc.’s head of currency strategy for major developed economies, said in an e-mail from New York. “In baseball parlance, they were aiming for a single in terms of restoring confidence, and they probably achieved it.”
The G20 statement saw ministers and central bank chiefs double down on a line from their last gathering, that “monetary policy alone cannot lead to balanced growth.” The G20 members did reaffirm they will refrain from competitive devaluations, and ― in new language ― agreed to consult closely on currencies.
While central banks proved critical in avoiding a global depression last decade, there is now no consensus among officials from the world’s top economies for an increase in monetary stimulus. That leaves the focus on fiscal polices that are subject to domestic political constraints, and a structural-reform agenda the G20 said will be gauged through a new indicator system.
“The G20 is saying all the right things, so the comments may be seen as soothing by financial markets,” said Shane Oliver, head of investment strategy at fund manager AMP Capital Investors Ltd in Sydney. “But I am not convinced that it means a lot more coordinated policy stimulus is about to follow.”
New Zealand’s S&P/NZX 50 Index, the first major stock gauge in the Asia-Pacific region to start trading each day, added 0.1 per cent as of 7.41am Tokyo time, rising for the third time in six days.
Japan reports a swathe of economic data today, including industrial output and retail sales, while Australia updates on private-sector credit. Singapore posts on money supply, Thailand reports on trade and India’s much-anticipated government budget is due. Markets in Taiwan are shut for a holiday. ― Bloomberg