(menafn – ecpulse)
Asian stocks advanced on Tuesday with investors awaiting the outcome of the Feds meeting, the US retail sales are expected to grow by the fastest in 5-months, while EU finance ministers approved Greece’s 130 billion euros bailout.
With the US economy providing more signs of recovery and worries over Europe’s debt crisis started to ease, investors felt more confident to increase their appetite for risk and target the higher yielding assets, pushing the commodities higher and the MSCI Asia Pacific Index up 1% at 14:36 in Tokyo.
The US retail sales are expected today to rise by the fastest in 5-months during February, while in Germany the confidence may strengthen in March, yet most eyes will turn to the Feds meeting, trying to find a clue over the direction of interest rates, although for now the monetary policy may be kept unchanged.
The positive jobs growth seen in the US in recent months lowered the chances for further monetary stimulus, thereby it is widely expected that the Feds will bring no surprises today, by keeping the interest rate at record low between 0 to 0.25% and refrain from adding more stimulus measures.
In Europe, the EU finance ministers who met in Brussels on Monday at the Economic and Financial Affairs Council confirmed that Greece’s bailout had been approved, as Greece finalized its debt swap deal over the weekend. However, meeting continues on Tuesday with the attention being shifted to Spain.
In Japan, the central bank decided to keep the interest rate unchanged between zero and 0.1%, the asset purchase fund unchanged at 30 trillion yen and the credit-loan program at 35 trillion yen, although board member Ryuzo Miyao proposed an expansion of the asset-buying and loan-scheme by 5 trillion yen.
This decision comes after last month's surprise loosening, when the asset purchase scheme (BOJ's direct, short-term monetary policy tool) was expanded by 10 trillion yen to 65 trillion, and set a 1% inflation target, which gave signals of a more aggressive monetary easing approach to fight deflation.
However the bank added a 1 trillion yen program for loans denominated in US dollars and expanded the venture-capital style domestic fund by 500 billion yen to 3 trillion yen. The bank also expanded a separate loan scheme, which targets growth industries, by 2 trillion yen, to 5.5 trillion yen.
Caution may persist this week as EU’s attention is shifting towards Spain, while the Feds will release the results of the banks stress test on Thursday, being the first time since 2009 that the outcome will be released to the public. The test determines if banks have enough cash and securities to survive a catastrophic financial crisis.