Asia report: Stocks sink on Fed hike, BoJ stands pat

Asian stock markets sank even further on Thursday, as investors reacted to a 75-basis point rate hike accompanied by more hawkish rhetoric from the US Federal Reserve overnight.

In Japan, the Nikkei 225 was down 0.58% at 27,153.83, as the yen strengthened 0.85% on the dollar to last trade at JPY 142.83, amid unconfirmed reports of a government intervention in the currency.

Robotics specialist Fanuc was down 0.87%, Uniqlo owner Fast Retailing lost 1%, and tech investing giant SoftBank Group was off 2.02%.

The broader Topix index was 0.24% weaker by the end of trading in Tokyo, settling at 1,916.12.

Earlier in the session, the Bank of Japan stood pat on its ultra-easy monetary policy, keeping interest rates on hold in a move widely anticipated.

“There's absolutely no change to our stance of maintaining easy monetary policy for the time being,” said Bank of Japan governor Haruhiko Kuroda.

“We won't be raising interest rates for some time.”

Craig Botham at Pantheon Macroeconomics noted that there was “no hint that a tightening was in the offing”, despite the bumper hike from the Federal Reserve stateside overnight.

“The statement accompanying the decision referenced ‘extremely high uncertainties’ facing the economy, stemming from Covid, the war in Ukraine, commodity prices, and global growth and inflation.

“The yen received only a passing mention, as previously, with a comment that ‘it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japan’s economic activity and prices.’”

Botham said such “anodyne and unchanged” language suggested that the BoJ would not be taking the lead on currency intervention, as Kuroda had maintained for some time.

“The statement also maintained a clear dovish tilt, promising to take additional easing measures if necessary.”

On the mainland, the Shanghai Composite was off 0.27% at 3,108.91, and the technology-centric Shenzhen Component was 0.84% lower at 11,114.43.

South Korea’s Kospi was down 0.63% at 2,332.31, while the Hang Seng Index in Hong Kong slid 1.61% to 18,147.95.

Seoul’s blue-chip technology stocks were in the red, with Samsung Electronics down 1.63% and SK Hynix losing 2.27%.

Oil prices were higher as the region went to bed, with Brent crude futures last up 0.42% on ICE at $90.21 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.51% at $83.36.

In Australia, markets were closed for a holiday, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, managing gains of 0.17% to 11,518.32.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.04% at AUD 1.5077, and the Kiwi advancing 0.01% to NZD 1.7083.

Reporting by Josh White at Sharecast.com.