Asian markets climbed after Japan shares took a roller-coaster ride in the immediate aftermath of the Bank of Japan's (BOJ) decision to adopt a negative interest rate policy.
The Nikkei 225, which was down 0.6 percent before the announcement, surged as much as 3.51 percent soon after, before tumbling as much as 1 percent. It then surged to close up 2.80 percent, or 476.85 points, at 17,518.30.
After the BOJ move, the yield on the benchmark 10-year Japan government bond (JGB) fell to a record low of 0.11 percent from around 0.22 percent before the decision.
There was no quick agreement on why the market outlook on the move shifted so quickly.
Gavin Parry, managing director at Parry International Trading, suggested that a move to negative deposit rates just after a supplementary increase in Japan's qualitative and quantitative easing (QQE) program could have been read to mean the BOJ was running out of bullets.
In its statement on Friday, the central bank said it would continue with the QQE and negative interest rate policies for "as long as it is necessary for maintaining that target in a stable manner."
Marcel Thieliant, senior Japan economist at Capital Economics thought the overall complexity of the BOJ's move may have spurred the midday selloff.
"What they did announce today will be effective. It will lead to lower rates in the money market. But some people had second thoughts once they read the statement," he said.
He noted that the BOJ had imposed a "three-tier" system on negative rates. With the huge amount of bank reserves currently sitting with the central bank, "if they impose a negative rate on all these balances, it would have a big impact on banks' profitability," he said, noting that existing reserves were going to be exempted, but there was likely confusion about how the amounts subject to negative rates would be increased.
The dollar-yen pair gained advanced after the announcement, trading as high as 121.35, from around 118.50 before the news. The pair trimmed gains to trade around 120.82 after the Japan stock market closed.
Banks in Japan, which will likely see their profit dented by negative rates, sold off, with Mitsubishi UFJ falling 2.81 percent and Mizuho Financial ending down 1.67 percent. But exporters, which benefit from a weaker yen when their overseas earnings are translated into their home currency, rallied. Sony surged 6.10 percent and Nissan added 7.13 percent.