Asia report: Markets down as investors look to central banks

Markets in Asia started the week on a disappointing note, with volumes down as traders stepped back ahead of important central bank decisions from the US, Japan and New Zealand this week.

In Japan, the Nikkei 225 ended down 0.76% at 17,439.30.

The yen turned stronger against the dollar towards the end of the trading day, though was still much weaker than the 107 levels seen a week ago. It was last trading 0.52% stronger at JPY 111.21 per USD.

“There are now reports that the BOJ could introduce negative lending rates to complement negative deposit rates,” said BK Asset Management strategist Kathy Lien on the yen’s relative weakness.

“With the Japanese economy struggling under the weight of a strong yen and slower global growth, and speculators holding a record amount of long yen positions, the change of easing by the BOJ is high.”

Exporters in the island nation were mixed, with Toyota up 1.23% and Honda up 0.85%, while Sony fell 6.02%.

Shares in the electronics giant were under serious pressure after it announced on Friday it would delay revealing its 2016 earnings forecasts, while it assessed the damage to its property from their recent earthquakes in southern Japan.

It was due to release the forecasts on April 28, but would now delay it until May.

Mitsubishi Motors was also continuing its downward slide, felling 4.76% on Monday. It had fallen 41% last week after admitting it falsified fuel economy test data to make emissions look better.

Energy plays in Japan were also lower, with Inpex down 1.81% and Japan Petroleum falling 0.56%.

On the mainland, both the Shanghai Composite Index and the Shenzhen Composite were down by 0.41%, at 2,946.96 and 1,859.90 respectively.

Lower oil prices saw China’s Sinopec slip 1.01%.

Korea’s Kospi was 0.05% lower at 2,014.55, while Hong Kong’s Hang Seng Index finished off by 0.76% at 21,304.44.

Oil prices slipped during Asian trading, and remained depressed after the region went to bed. Brent crude was last down 1.85% at $44.29 per barrel, and West Texas Intermediate was down 2.03% at $42.86.

The US Federal Reserve, the Bank of Japan and the Reserve Bank of New Zealand are all meeting this week.

“While most focus will centre on possible policy action from the BOJ, traders will be looking for forward guidance both from the Fed and RBNZ,” said OANDA senior trader Stephen Innes.

He predicted a “very bumpy” week ahead.

Half of all analysts polled by Reuters were anticipating further easing from Tokyo ahead of the BOJ meeting.

The markets were also expecting the Fed to keep still on its rates as well.

“Currently, the market is at odds with the Fed’s anticipated trajectory, with traders only pricing in one rate hike in 2016 versus the Fed’s guidance suggesting two rate hikes,” Innes added.

Markets down under were closed for the day, as both Australia and New Zealand commemorated the ANZAC Day war memorial holiday.

The Aussie dollar did slip back from the greenback on the public holiday, and was last trading 0.2% weaker at AUD 1.2996 per USD. The Kiwi was 0.16% stronger, at NZD 1.4571.