Asian stocks retreat on falling prospects of Japanese helicopter money

Stocks markets across Asia retreated on Friday after Bank of Japan’s (BOJ) Kuroda dashed hopes of helicopter money.

At the time of writing, Japan’s Nikkei was down 0.90%. Kuroda’s comments drove Yen higher, which further added to bearish pressure on Nikkei. Australia’s S&P/ASX 200 was down 0.24%. South Korea’s Kospi was trading largely flat on the day. India’s Nifty 50  was poised to open slightly weaker.

Talk of fiscal easing along with monetary easing pushed Asian and global stock markets higher in post Brexit vote period. However, odds of helicopter money (permanent expansion in monetary base) have dropped following Kuroda’s comments.

Now the Bank of Japan is left with two options - expanding QQE or expanding QQE with a further cut in interest rates. However, the question is whether markets respond positively to more monetary easing.