Wall Street Lifts Asian Shares

Wall Street’s record closing and optimism on the Chinese economy lifted Asian shares in early Thursday morning trading. The Japanese yen continues to be under strong pressure. The USD/JPY is trading at 99,60, a hair’s breadth within the 100 level. The yen continues to test fresh lows against major currencies as the effect of the Bank of Japan’s (BOJ) bold monetary easing takes hold. The South East Asian Pacific index, MSCI, gained 0,8%, while the Japanese Nikkei jumped 1,3%.

The new BoJ Governor has proven that the bank means serious business regarding a 2% inflation level, bringing fresh impetus to a stagnating, deflationary economy. There are questions whether this is enough. Monetary measures ought to be followed up by a strong restructuring of the Japanese economy, especially steps to encourage the private bond market. Japanese bonds have fallen on BoJ measures, and Japanese investors are said to be moving funds into foreign bonds.

According to the recently published minutes from the Federal Reserve (FED) Board’s meeting, FED officials have debated to slow down the pace of asset purchases or end them later this year. The Dow Jones industrial average and the Standard & Poor’s 500 gave also impetus to a stronger dollar. Both indexes ended at historic highs on Wednesday, led by cyclical shares on China’s rosier demand outlook. Chinese imports have increased significantly during the last quarters. Higher-yield commodity currencies also gained ground on the Chinese data, with the Australian dollar jumping to 1,0553 Against the USD.

A report published by the European commission yesterday painted a bleak picture of the eurozone's economic development. One of the newcomers, Slovenia, has been a stark warning to put his house in order. Slovenia's banking sector is debt ridden and the country might be the next in line to follow Cyprus. The EU Commission also points to serious weaknesses in the banking sector in Italy, France and Spain - a reminder that the European banking and financial crisis might only be starting.