Before the BOJ's decision, many investors warned of a big chance of disappointment because markets have long expected more stimulus Photograph: (Reuters)
'The BOJ did not live up to expectations. It won't admit, but it has reached the limits of quantitative easing and negative rates.'
Asian shares slipped today after touching a near one-year peak, while Japanese stocks tumbled and the yen strengthened as the Bank of Japan's (BOJ) fresh stimulus measures disappointed markets.
The BOJ modestly increased purchases of exchange-traded funds, but maintained its base money target at 80 trillion yen ($775 billion) and the pace of purchases of other assets, including Japanese government bonds.
The central bank also held at 0.1 per cent the interest it charges to a portion of excess reserves financial institutions leave with the central bank.
Japan's Nikkei, which swung between gains and losses right after the announcement, was last trading down 1.5 per cent. The index, which touched a seven-week high last week, was on track for a 2.4 per cent weekly drop, shrinking gains for July to 4.2 per cent.
Dollar sees biggest one-day decline after Brexit
The dollar weakened 1.9 per cent to 103.27 yen, its biggest one-day decline since June 24, after the UK's decision to leave the European Union (EU).
Before the BOJ's decision, many investors warned of a big chance of disappointment because markets have long expected more stimulus, making it difficult for BOJ Governor Haruhiko Kuroda to spring a surprise.
"The BOJ did not live up to expectations," said Norio Miyagawa, senior economist at Mizuho Securities in Tokyo. "Increasing ETF purchases makes no contribution to achieving 2 per cent inflation. The BOJ won't admit it, but it has reached the limits of quantitative easing and negative rates."
MSCI's broadest index of Asia-Pacific shares outside Japan pulled back 0.3 per cent after hitting the highest level since Aug. 11, leaving it on track for gains of 1 per cent for the week, and 5.5 per cent for the month.
Wall Street shares remained near all-time highs, with tech heavyweights Alphabet and Amazon rising after the bell as their earnings beat expectations.
The stronger yen also weighed on the dollar index, which slipped 0.4 per cent to 96.364, putting it on track for a slide of 0.6 per cent for the week, but a gain of 0.2 per cent for the month.
European shares fell on Thursday, as markets awaited the release of the stress test results on European banks on Friday night.
The euro stood little changed at $1.1084 . It is up almost 1 per cent this week, but poised for a 0.2 per cent loss in July.
Elsewhere in markets, oil prices fell to three-month lows, with US benchmark now down more than 20 per cent from this year's peak on growing worries that the world might be pumping more crude than needed.
US crude futures fell to as low as $40.95 per barrel and were last down 0.2 per cent at $41.08. It's set for a drop of 7 per cent for the week and 14.9 per cent in July.
International benchmark Brent crude futures dropped 0.1 per cent to $42.65. It is down 6.7 per cent this week and 14 per cent this month.