Shares in Asia closed lower on Friday, following a trend started in the U.S. overnight. The Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and NASDAQ Composite (INDEXNASDAQ:.IXIC) all reversed course and closed in the red with airline and energy stocks leading indices lower.
The decision by the European Central Bank to maintain the status quo on rates and comments by the government of the Bank of Japan regarding no helicopter money easing seemed to have weighed on Asian stocks.
How Asian markets lost ground
Japan’s Nikkei 225 (INDEXNIKKEI:NI225) fell 1.1% after shedding 182.97 points to close at 16,627.25. Equity losses in Tokyo on Friday were led by Glass, Retail and Transport sectors.
Not even a weaker yen could keep stocks steady in Tokyo as it provides a cheaper entry to foreign investors. Yen weakened further on Friday with the USDJPY pair rising 0.07% to 105.93. EURJPY also gained 0.07% to 116.78.
The USD continued to strengthen on Friday against international rivals with the Dollar Index rising 0.03% to 96.97 during Asian trading.
No helicopter money
With the threat of looming recession, it has been widely expected that the Bank of Japan would rollout more aggressive monetary easing measures. But Haruhiko Kuroda, the governor of the BoJ, appeared to rule out the idea of helicopter money in a BBC interview that aired on Thursday.
Talks of helicopter money easing in Japan have gained currency, no pun intended, in recent weeks as it became more apparent that efforts by the BoJ such as interest rate reduction and yen devaluation are doing little to boost inflation.
In helicopter money policy, the central bank underwrites the deficit in the government’s budget. But it is not legal in Japan as of now, thus requiring a constitutional amendment, which seemed within reach after the ruling coalition won a majority in the upper-house.
In Taiwan, the Taiwan Weighted fell 0.48% after being rattled by losses in the country’s Communications and Internet, Oil, Gas & Electricity sectors.
It was the same losing streak in Australia where the S&P/ASX 200 pulled back 0.48%. The worst performers in Australia’s equity market on Friday were Telecom Services, Consumer Discretionary and Consumer Staples.
The Aussie also lost ground against the greenback with AUDUSD declining 0.23% to 0.7476.
In China, the larger Shanghai lost 0.86% and the smaller HANG SENG INDEX (INDEXHANGSENG:HSI) in Hong Kong pulled back 0.16%.