Nikkei bounces on BoJ loan scheme news

<p>The Nikkei rose by 3.5 per cent during trading today.</p>

The Nikkei looks to have put its bad start to the week behind it, recording strong levels of growth during today's (February 18th) trading session.

After rising by 0.56 per cent yesterday, bouncing back from a one-and-a-half week low in the process, the Nikkei was up by a further 3.5 per cent today.

The yen dived against major rival global currencies, which in turn led to support for some of the biggest exporters in Japan that are listed on the Nikkei. Exporters in Japan tend to perform well on stock markets when the yen is poor as they get a good return on their goods and services.

A major boost for the Nikkei also came following the news that the Bank of Japan (BoJ) has doubled loan programmes, which are aimed at stimulating bank lending and economic growth in the Asian nation. It was also announced by the BoJ that it has kept its main asset purchase policy target unchanged, which was expected by analysts.

Rally for Nikkei

Norihiro Fujito, senior strategist at Mitsubishi UFJ Morgan Stanley Securities, said: "Speculators jumped on the news but, if you think carefully, it's questionable if this will justify a big rally in the Nikkei."

The Nikkei has come a long way since hitting five-month lows recently, rising by six per cent on the back of that bad period for the Japanese stock market, which comfortably outperformed rivals such as the Dow Jones and the FTSE 100.

Daisuke Uno, chief strategist at Sumitomo Mitsui Bank, suggested that the Nikkei may not be out of the woods just yet and urged investors to be careful. He said: "There is a bit of a fault line between the currency market and the stock market at the moment. US shares are riding on optimistic views on the U.S. economy but the currency market is viewing the US economic fundamentals less favourably."

Data released yesterday showed that the Japanese economy has expanded for the fourth quarter in a row, although growth did not meet the expectations of analysts.

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