Asia report: Markets mostly weaker, BoJ stands pat on rates

Most stock markets were weaker at the close in Asia on Friday, as investors reacted to recent hawkishness from central banks, following the Bank of England’s surprise interest rate hike on Thursday.

In Japan, the Nikkei 225 was down 1.79% at 28.545.68, as the yen strengthened 0.07% on the dollar to last trade at JPY 113.59.

Of the major components on the benchmark index, automation specialist Fanuc was down 1.9%, fashion firm Fast Retailing was off 1.32%, and technology conglomerate SoftBank Group lost 2.87%.

The broader Topix index was 1.42% weaker by the end of trading in Tokyo, closing at 1,984.47.

In central bank action, the Bank of Japan maintained its short-term interest rate target at -0.1% and its 10-year yield at 0%, in line with forecasts.

The bank did, however, turn down its pandemic emergency funding measures, although it did extend small business relief.

On the mainland, the Shanghai Composite lost 1.16% to settle at 3,632.36, and the smaller, technology-heavy Shenzhen Composite was down 1.41% at 2,523.15.

South Korea’s Kospi was ahead 0.38% at 3,017.73, while the Hang Seng Index in Hong Kong slid 1.2% to 23,192.63.

Chinese technology plays were among the big losers in the special administrative region, with Alibaba down 3.07%, Baidu off 0.86%, JD.com losing 3.51%, Meituan tumbling 5.29%, and Tencent Holdings 3.23% weaker.

The moves came after state media reported that Beijing authorities were preparing to change the law to allow ride-hailing and food delivery workers to unionise.

It also followed a fresh round of sanctions on China by the United States overnight, with Washington placing trade restrictions on more than 30 research institutes and organisations in the People’s Republic.

The US said the sanctions were over human rights violations and the alleged development of technology and “brain control” weaponry that threatened America’s national security.

Seoul’s blue-chip technology stocks were mixed, with Samsung Electronics managing gains of 0.26%, while SK Hynix lost 1.61%.

“US markets started the day on the front foot, however as the day progressed a sell-off in the Nasdaq started to weigh on the wider market, as the prospect of slightly higher rates chipped away at the attractiveness of some of the more richly valued sectors, dragging the S&P 500 and Dow along with it,” saud CMC Markets chief market analyst Michael Hewson of the moves globally overnight.

“This late US weakness looks set to weigh on today’s European open in a week that has seen a lot of chop but not much in the way of direction.

“Asia markets also slipped back as a result of the weakness in US markets, while the Bank of Japan left monetary policy unchanged.”

Oil prices were lower as the region entered the weekend, with Brent crude last down 1.59% at $73.83 per barrel, and West Texas Intermediate losing 1.45% to $71.32.

In Australia, the S&P/ASX 200 managed gains of 0.11% to settle at 7,304.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.47% at 12,717.94.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.32% at AUD 1.3964, and the Kiwi retreating 0.52% to NZD 1.4782.