Asia report: Most markets rise as BoJ maintains policy

Asia-Pacific markets finished mostly higher on Tuesday after the Bank of Japan stood pat on monetary policy.

The central bank kept its negative interest rate policy on hold and maintained its approach to yield curve control in its final meeting of the year.

"Asian stocks traded mixed after a slow start, with limited news and no significant impact from the Bank of Japan's actions," said Patrick Munnelly at TickMill Group.

"The yen was affected as the BoJ kept its rate and yield curve control unchanged and acknowledged the recent cooling in inflation.

"Governor Ueda says that any policy change could involve surprise, and it's difficult to present a clear picture on policy exit."

Udea also mentioned that the market should be able to forecast the Bank's policy shift to some extent, Munnelly noted.

"When it comes to exiting from negative interest rate policies, BoJ does not have a detailed picture of the order of policies to be taken.

"Additionally, accommodative conditions would be maintained for an unspecified period after lifting of negative rates."

Most markets in the green, led by Japan

In Japan, the Nikkei 225 rose 1.41% to reach 33,219.39 points, with the Topix also showing positive movement, up by 0.73% to 2,333.81 points.

The gains on Tokyo's benchmark were led by Kawasaki Kisen Kaisha, up 5.69%; Konami, ahead 5.13%; and Ebara, which added 4.75%.

In China, the Shanghai Composite increased marginally by 0.05% to 2,932.39 points, while the Shenzhen Component showed a slight gain of 0.11% to 9,289.34 points.

Notable performers in Shanghai included China Master Logistics and Beijing Wantai Biological Pharmacy Enterprise, which recorded gains of 10.03% and 10%, respectively.

On the other hand, Hong Kong's Hang Seng Index experienced a decline of 0.75%, closing at 16,505.00 points.

The declines were led by Country Garden Services, Meituan, and Longfor Properties, with significant drops of 11.71%, 5.65%, and 5.63%, respectively.

South Korea's Kospi index showed marginal gains of 0.07%, closing at 2,568.55 points.

HMM and E-Mart were among the top gainers, with increases of 5.07% and 3.69%, respectively.

Australia's S&P/ASX 200 performed positively, rising by 0.84% to 7,489.10 points, led by Liontown Resources and Neuren Pharmaceuticals, with respective increases of 11.26% and 7.93%.

New Zealand's S&P/NZX 50 index increased by 0.45%, closing at 11,617.37 points, with Precinct Properties ahead 2.89% and Ryman Healthcare 2.8% firmer.

In currency markets, the dollar was last 1.17% stronger on the yen, trading at JPY 144.45.

Meanwhile, the greenback saw minor declines against its downunder counterparts, falling 0.36% on the Aussie to AUD 1.4858 and retreating 0.39% against the Kiwi to change hands at NZD 1.6035.

On the oil front, Brent crude futures were last down 0.28% on ICE at $77.73 per barrel, while the NYMEX quote for West Texas Intermediate fell 0.48% to $72.12.

Bank of Japan keeps interest rates, yield curve control on hold

Japan's central bank was at the top of the agenda on Tuesday after it opted to maintain its ultra-loose monetary policy during its final policy meeting of the year.

The Bank of Japan said "extremely high uncertainties" still prevailed, but it set the stage for potential adjustments in the new year.

In a unanimous decision, it kept interest rates steady at -0.1% and retained its yield curve policy, with a reference point of the 1% upper limit for 10-year Japanese government bonds.

"The Bank's statement noted Japan has recovered moderately, but that the rebounds in other economies have slowed," said Duncan Wrigley at Pantheon Macroeconomics.

"It noted slowing consumer inflation excluding fresh food, mainly attributing it to government energy subsidies."

Wrigley said the central bank expected consumer inflation, excluding fresh food, to remain above 2% in the 2024 financial year, thanks to the lagged effect of higher import costs.

"The BoJ expects underlying consumer inflation to rise gradually toward the 2% target for sustained inflation, as the output gap turns positive and wage growth rises."

Meanwhile, minutes from the most recent Reserve Bank of Australia (RBA) meeting showed it deliberated a potential 25 basis point rate hike in December before ultimately choosing to maintain the status quo at 4.35%.

The RBA's consideration for a rate increase was linked to expectations of sustained inflation above its 2% target, with concerns that elevated price rises could persist.

Additionally, Australia's underlying inflation was noted to be higher compared to several other countries.

Conversely, the decision to keep rates unchanged was influenced by weak consumption demand growth, and RBA members observed that some other countries had experienced an accelerated pace of disinflation in recent months, a trend that could potentially assist in bringing Australian inflation back in line with its target.

Reporting by Josh White for Sharecast.com.