Asia report: Markets mixed as BoJ, RBNZ stand pat

All eyes in Asia were on the Bank of Japan on Thursday, as the central bank stood pat on monetary policy, leading to a local sell-off and a surge in the yen against the greenback.

The Nikkei 225 closed down 3.61% at 16,666.05, having gained 1.41% before the decision from the BoJ. The Topix finished down 3.16% at 1,340.55.

Japan’s safe-haven yen moved sharply in reaction to the decision, and as last ahead by 2.95% at JPY 108.17 per USD. It was trading around the 111 mark prior to the central bank’s release.

Major exporters in the country took a tumble thanks to the yen’s strength - Toyota closed down 3.27%, Nissan fell 4.31% and Honda lost 4.18%.

Japanese banking stocks were also sharply affected by the selloff, with Mitsubishi UFJ closing down 5.95%, SMFG losing 6% and Nomura tumbling 10.05%.

Apparel behemoth Fast Retailing - which owns the Uniqlo brand globally among others - sold off 5.79%.

"I suspect the BoJ gave into the domestic uproar that negative interest rates policy are destabilizing the currency markets, along with negatively impacting local banks. Big business won this round,” said OANDA senior foreign exchange trader Stephen Innes.

He said the central bank was likely to be taking a “wait and see” approach to see what the full effect of its current interest policy, and remained “likely [to] unleash a massive stimulus package at a later date.

“I suspect we could see a bottoming on this recent dollar/yen capitulation in 108.50-109.00 range,” he added.

Before the BoJ released its decision, new data from Tokyo showed Japan’s consumer price index dropped 0.3% year-on-year in March, against a forecast 0.2% annual gain.

The embattled Mitsubishi Motors was a shining light amid the gloom, advancing 6.4% - though it was still down more than 50% in the year to date.

It had announced earnings above expectations on Wednesday, with operating income rising 1.8% to JPY 138.4bn.

Earlier in the week it revealed it had falsified mileage test data since 1991 - a revelation it uncovered in an internal investigation after going public with more recent falsified test data last week.

Markets in mainland China slipped back, with the Shanghai Composite Index down 0.25% at 2,946.20, and the Shenzhen Composite losing 0.1% at 1,874.30.

Korea’s Kospi fell 0.72% at 2,000.93, while Hong Kong’s Hang Seng Index gained 0.12% to close at 21,388.03, having traded flat for much of the day.

One of Korea’s biggest firms, Samsung Electronics, closed down 2.69% after the smartphone market reported an 11.7% year-on-year increase in first quarter operating profit to KRW 6.68trn.

Operating profit in its mobile division rose to KRW 3.89trn as sales of its flagship Galaxy S7 surged, while operating profit for its semiconductor business fell to KRW 2.63trn from KRW 2.93trn a year earlier.

Oil prices slipped back during Asian hours, and remained choppy as the region went to bed. Brent crude was last flat at $47.18 per barrel, while West Texas Intermediate slid 0.04% to $45.31.

In the US overnight, the Federal Reserve chose not to raise interest rates in this round of the Federal Open Market Committee.

"The Fed statement was incrementally more hawkish than its March statement, removing its concerns about "global and financial developments"," said IG market analyst Angus Nicholson.

In Australia, the S&P/ASX 200 moved up 0.73% to 5,225.40, underpinned by strong performance from the energy and materials subindexes.

Further east, New Zealand’s S&P/NZX 50 closed up 0.58% to 6,789.98 after the Reserve Bank of New Zealand also held steady on monetary policy.

In its statement, the central bank said the outlook for global growth had deteriorated due to weakness in China and other emerging markets.

The RBNZ remained expectant that local inflation would strengthen, with the “effects of low oil prices dropping out and capacity pressures gradually building”.

After the decision, the Kiwi quickly gained on the US dollar, and was last ahead by 1.84% at NZD 1.4353. The Aussie also moved on the greenback, and was last 0.54% stronger at AUD 1.3103.