Asia report: Most markets rise as Bank of Japan holds policy

Most stock markets in the Asia-Pacific region were higher on Wednesday, after the Bank of Japan kept its yield curve control policy on hold.

In Japan, the Nikkei 225 was up 2.5% at 26,791.12, as the yen weakened 0.73% against the dollar to last trade at JPY 129.06.

Automation specialist Fanuc was up 2.66%, fashion firm Fast Retailing added 2.74%, and technology conglomerate SoftBank Group was 2.42% higher.

The broader Topix index was ahead 1.68% by the end of trading in Tokyo, settling at 1,934.93.

Markets were surprised by the Bank of Japan earlier in the session, as it stood pat on its yield curve control control band.

It also maintained its other monetary policy, leaving its key interest rate at -0.1%.

“We don’t need to further expand the band around our yield target,” said BoJ governor Haruhiko Kuroda in a press conference after the decision.

“It’s been not long since we decided on our measures in December.

“It will likely take some more time for the measures to start having an effect in fixing market function.”

Duncan Wrigley at Pantheon Macroeconomics said the BoJ looked likely to remain in a holding pattern at least until the economy recovered, likely later in the year.

“Governor Kuroda said Japan is still in the middle of a pandemic recovery,” he said.

“Both domestic demand and exports are weak, and wage increases have not kept up with consumer inflation.”

Wrigley said the pressure on the yen had eased, as the broad dollar index had weakened since November, though import inflationary pressures were still driving up consumer inflation.

“Inflationary expectations are creeping up, and China’s economic reopening should support Japanese economic recovery from March onwards, though against the backdrop of tepid global demand.”

In economic news out of Japan, the country’s core manufacturing orders dropped more than anticipated in November.

Private-sector manufacturing orders were down 8.3% month-on-month, which was much bigger than the 0.9% decline economists polled by Reuters were expecting.

Looking at the year-on-year figures, manufacturing orders were down 3.7%.

On the mainland, the Shanghai Composite was flat at 3,224.41, and the technology-heavy Shenzhen Component eked out gains of 0.09% to 11,810.66.

South Korea’s Kospi was down 0.47% at 2,368.32, while the Hang Seng Index in Hong Kong was 0.47% firmer at 21,678.00.

Video game-related stocks were in the green in the special administrative region, after regulators in Beijing approved a list of 88 game titles.

NetEase ended the session up 6.51%, and Tencent Holdings was 1.66% firmer by the end of trading.

The blue-chip technology stocks were in the red in Seoul, with Samsung Electronics down 0.98% and SK Hynix 1.05% weaker.

Oil prices were in the green at the end of the Asian day, with Brent crude futures last up 1.48% on ICE at $87.19 per barrel, and the NYMEX quote for West Texas Intermediate ahead 1.8% at $81.62.

In Australia, the S&P/ASX 200 managed a rise of 0.1% to 7,393.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 added 0.33% to 11,920.41.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.43% at AUD 1.4249, and the Kiwi advancing 0.87% to NZD 1.5429.

Reporting by Josh White for Sharecast.com.