ASIA MARKETS: Nikkei Pares Losses As BOJ Takes An Upbeat Tone

By Kenan Machado Features Dow Jones Newswires

Investors unimpressed by lack of details in Trump's tax plan

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Japanese shares pared losses Thursday after the Bank of Japan indicated that it is unlikely to move away from easy-money policies.

Other Asian equity markets turned higher Thursday, pushing back against early losses that tracked overnight weakness on Wall Street.

The Nikkei Stock Average closed 0.1% lower, after opening down 0.4%, ahead of the BOJ release. Hong Kong's Hang Seng Index ended up 0.5% and Australia's S&P/ASX 200 gained 0.6%.

The BOJ, which concluded a two-day policy meeting Thursday, met market expectations in leaving its rates and pace of asset purchases unchanged (http://www.marketwatch.com/story/bank-of-japan-leaves-rates-unchanged-says-inflation-is-lagging-2017-04-26). Though it offered a more upbeat tone on the economy, the central bank lowered its inflation forecast for this year to 1.4% from 1.5%. That helped pour water over speculation that the BOJ may raise interest rates this year or turn flexible on yield curve.

"Today's downward forecast adjustment highlights that the bank is still struggling to lift inflation," said Marcel Thieliant, a senior economist for Japan at Capital Economics. "We think that policy tightening remains unlikely for the foreseeable future."

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In China, the Shanghai Composite Index reversed course to end up 0.4%. Shares turned higher as investors interpreted comments Wednesday by Chinese President Xi Jinping to mean Beijing may ease off efforts to rein in irregularities.

"The speech by the Chinese president outlined the bottom line, which is that tightening regulatory moves shouldn't become so aggressive as to trigger systemic risks," said Zhang Gang, an analyst at Central China Securities.

Asian markets had broadly opened lower over disappointment at the lack of details in the much-touted Trump tax plan (http://www.marketwatch.com/story/markets-got-what-was-broadly-expected-from-tax-plan-a-starting-point-2017-04-26), unveiled overnight. U.S. stocks gave up their gains late in Wednesday's session, with the key indexes ending slightly lower.

"There is plenty of quibbling about a lack of detail -- given it was a one-pager," said Greg McKenna, a chief market strategist at forex broker AxiTrader.

Read:Trump rushes out a tax plan based on a deception (http://www.marketwatch.com/story/trump-rushes-out-a-tax-plan-based-on-a-deception-2017-04-26)

And see: Trump's tax plan sets the stage for Dow 30,000 (http://www.marketwatch.com/story/trumps-tax-plan-sets-the-stage-for-dow-30000-2017-04-26)

Any upside over news of a tax cut was already priced into global markets reflecting the lack of a major jump following the announcement, analysts say.

"To be fair, the tax cuts were massive," said Vishnu Varathan, a senior economist at Mizuho Bank. But the absence of details over funding the estimated $5.5 trillion bill over the next 10 years cast doubt on the sustainability of these cuts even if it gets approved, he said.

In South Korea, the benchmark Kospi eked out a 0.1% rise following better-than-expected first-quarter gross domestic product data. Economic output grew a seasonally adjusted 0.9% in the first quarter from the previous three months, beating a median forecast for a 0.7% expansion.

Meanwhile, shares in technology heavyweight Samsung (005930.SE) rose 2.4%, after the world's largest smartphone maker by revenue reported a 46% year-over-year rise in first-quarter net profit. Demand for its semiconductors and flexible display panels helped the company post its highest quarterly profit in more than three years (http://www.marketwatch.com/story/samsung-posts-highest-quarterly-profit-in-3-years-2017-04-27).

But stocks of other exporters in the country were down on a stronger won following a recent influx of foreign capital into stocks. Hyundai (005380.SE) lost 2.7%.

In Hong Kong, shares of AIA Group (1299.HK) rose 6.2% after the pan-Asian insurer Thursday said its value of new business rose 55% from the same quarter last year on a constant-currency basis. New business is a key performance indicator in the insurance industry.

Among other financial stocks, Standard Chartered's Hong Kong shares (STAN.LN) rose to a two-month high, gaining 4.9%, after the Asia-focused lender reported a near doubling of first-quarter profit before tax, thanks in part to a sharp drop in bad loans.

In currencies, the Canadian dollar and Mexican peso rose sharply against the U.S. dollar after U.S. President Donald Trump pledged not to pull out of the North American Free Trade Agreement.

(END) Dow Jones Newswires

April 27, 2017 06:27 ET (10:27 GMT)