Asia report: Markets mostly higher as BoJ holds rates steady

Stocks closed mostly higher in Asia on Friday, with the exception of Hong Kong’s benchmark index, which gave back some of its enormous gains from earlier in the week.

In Japan, the Nikkei 225 was up 0.65% at 26,827.43, as the yen weakened 0.37% against the dollar to last trade at JPY 119.04.

Automation specialist Fanuc was down 1%, while among the benchmark’s other major components, fashion firm Fast Retailing added 0.5% and technology conglomerate SoftBank Group was up 3.68%.

The broader Topix index was ahead 0.54% by the end of trading in Tokyo, settling at 1,909.27.

Japan’s central bank stood pat on monetary policy on Friday, sating market expectations as its left its key interest rates unchanged.

The Bank of Japan held its short-term interest rate at -0.1% and its 10-year bond yield target at around 0%.

It did, however, warn of “extremely high uncertainties” over how Russia’s ongoing invasion of Ukraine would affect both Japan and the global economies.

“Developments since the last meeting unsurprisingly coloured the tone of the BoJ’s assessment of the economy,” said Craig Botham at Pantheon Macroeconomics.

“The Omicron wave has interrupted the recovery in private consumption, and the BoJ’s statement also noted financial market volatility and commodity price shocks arising from Russia’s invasion of Ukraine, and flagged these as ongoing risks to the outlook.

“Rising energy and raw material costs are expected to drive further increases in inflation, alongside a narrowing output gap and higher medium-term inflation expectations.”

Botham was expecting the BoJ to stick to its word, and remain accommodative throughout 2022, even if inflation reached 2%.

“If anything, today’s meeting suggests the most likely shift is towards an even easier policy.

“The policy divergence with other central banks is set to widen quite dramatically, and for now, Kuroda doesn’t care.”

On the mainland, the Shanghai Composite added 1.12% to 3,251.07, and the smaller, technology-heavy Shenzhen Composite was 0.56% firmer at 2,144.90.

South Korea’s Kospi managed gains of 0.46% to 2,707.02, while the Hang Seng Index in Hong Kong went against its regional peers, slipping 0.41% to 21,412.40.

Ping An Insurance was among the winners of the day in the special administrative region, however, jumping 4.79% even after it reported its biggest fall in annual profit since 2008.

Seoul’s blue-chip technology stocks were on the back foot, with Samsung Electronics closing down 0.7% and SK Hynix managing to end the day unchanged.

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.7% at $107.39 per barrel, and West Texas Intermediate rising 1.36% to $104.38.

In Australia, the S&P/ASX 200 was 0.6% higher at 7,294.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 jumped 1.47% to 12,175.85.

Both of the down under dollars were marginally stronger on the greenback, with the Aussie and the Kiwi both last trading 0.02% ahead at AUD 1.3553 and NZD 1.4528, respectively.