Asia report: Markets fall, BoJ moves away from stock purchasing

Most markets in Asia closed in negative territory on the last trading day of the week, as the Bank of Japan signalled a move away from its massive monetary stimulus policy, and after a selloff stateside overnight.

In Japan, the Nikkei 225 was down 1.41% at 29,792.05, as the yen strengthened 0.01% against the dollar to last trade at JPY 108.88.

Of the major components on the benchmark index, automation specialist Fanuc was down 2.93%, fashion firm Fast Retailing slid 6.1%, and technology conglomerate SoftBank Group was 2.46% weaker.

Major financial plays were in the green, with Mitsubishi UFJ Financial up 1.92%, Mizuho Financial ahead 1.39%, Nomura gaining 1.28%, and Sumitomo Mitsui 1.95% firmer.

The broader Topix index managed gains of 0.18% by the end of trading in Tokyo, closing at 2,012.21.

Japan’s central bank signalled its move away from its huge monetary stimulus policy during the session, removing its JPY 6trn annual purchasing target for exchange-traded funds, but keeping the JPY 12trn ceiling on purchases introduced a year ago, to allow purchases as necessary.

As at 1 March, the central bank held more than $450bn in stocks, according to the NLI Research Institute, which made it the largest single shareholder on the Tokyo bourse.

At the same time the central bank made some minor tweaks to its interest rate policies, standing pat on its short-term rate at -0.1% as it stared down a long road towards its inflation target of 2%.

It put its Japanese government bond targets in writing for the first time, saying the 10-year yield could move freely within 0.25% either side of its 0% target.

That compared with previous guidance for movements of 0.2% around the bank’s target, which was only ever given verbally.

“The BoJ said it would no longer commit to buying exchange-traded funds at an annual pace of JPY 6trn, instead saying it would only purchase these assets when necessary,” explained Markets.com chief market analyst Neil Wilson.

“Both [the stock purchasing and yield target] moves are attempts to give the central bank more flexibility, and make its stimulus more sustainable in the wake of the pandemic as it tries to stimulate inflation,” Neil Wilson said.

“February core CPI inflation fell 0.4% year-on-year, signalling a decline in the rate annual declines in consumer prices for the second straight month, as rising fuel costs offset the drop in household spending.”

On the mainland, the Shanghai Composite was 1.69% weaker at 3,404.66, and the smaller, technology-heavy Shenzhen Composite lost 1.9% to 2,194.91.

South Korea’s Kospi edged 0.86% lower to 3,039.53, while the Hang Seng Index in Hong Kong slid 1.41% to 28,990.94.

Seoul’s blue-chip technology stocks were weaker, with Samsung Electronics down 1.21% and SK Hynix losing 2.82%.

The moves lower in Asia came after a negative session on Wall Street overnight, where a surging benchmark 10-year US Treasury note yield pushed technology stocks lower.

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.81% at $63.79 per barrel, and West Texas Intermediate rising 1.42% to $60.85.

In Australia, the S&P/ASX 200 slipped 0.56% to 6,708.20, as the hefty financials subindex lost 0.31%.

The country’s big four banks were in a mixed state, with Australia and New Zealand Banking Group up 0.32% and Westpac Banking Corporation rising 0.33%, while Commonwealth Bank of Australia lost 1.21% and National Australia Bank slipped 0.31%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 went in the opposite direction to its regional counterparts, eking out gains of 0.15% to 12,515.22.

The utilities sector gained 0.77% as Wellington’s turbulent energy generation plays rebounded from recent declines, with Contact Energy up 3.5%, Mercury NZ surging 4.8% and Meridian Energy 2.6% firmer.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.07% at AUD 1.2897, and the Kiwi retreating 0.03% to NZD 1.3955.