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Asia Times Financial market digest

HONG KONG: Financial markets received a boost from the Bank of Japan’s pledge to buy unlimited government securities even as the infection count began to show signs of plateauing.

The BoJ move accompanied a downward GDP revision. The central bank now expects the economy to shrink 3-5% compared with an earlier forecast for growth up to 1.1%.

The Nikkei 225 rose 2.7% as the central bank agreed to expand its balance sheet further cheering investors.

More central bank support is expected in the weekahead at the European Central Bank meeting this Thursday and this is also keeping investors optimistic. Markets expect the central bank to do more to allay debt sustainability concerns and that could include allowing the ECB to buy “junk”-rated debt under its QE programs, something that it has ruled out until now. 

The Stoxx Europe 600 climbed 1.7% and S&P Futures are 1% higher.

Elsewhere, the broad sentiment remained cautiously optimistic as investors awaited a rash of earnings announcements and economic data in the week ahead. The Hang Seng index added 1.88%, Korea’s Kospi benchmark advanced 1.79% and China’s main stocks benchmark the CSI 300 rose 0.68% even as data showed profits at China’s largest companies fell by 36% in Q1.  

The Bank of Japan said that in conducting the outright purchases of Japanese government securities in a flexible manner it may set “the purchase size per auction to a fixed amount or to an unlimited amount.” The central bank also said it will buy more corporate bonds and commercial paper boosting its total holdings of both asset classes to 20 trillion yen from 5 trillion, while keeping policy rates unchanged at -0.1%. 

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