Economy

Asian shares slide, yen steady ahead of Bank of Japan Meeting By Stocksak


© Stocksak. FILE PHOTO: Pedestrians wearing protective masks, amid the coronavirus disease (COVID-19) outbreak, are reflected on an electronic board displaying various company’s stock prices outside a brokerage in Tokyo, Japan, February 25, 2022. REUTERS/Kim Kyung-

By Ankur Banerjee

SINGAPORE, (Stocksak), – Asian equities edged lower Friday as investors grappled over mixed earnings reports. The Japanese yen remained firm ahead of the Bank of Japan’s policy revision.

MSCI’s broadest index of Asia-Pacific shares, outside Japan, was down 0.322%. This will end a three-day winning streak. The index is down close to 3% for this month and 30% for the whole year.

Australia’s stock market fell by 1.33% while Australia’s dropped 0.55%. China’s stock market fell 0.60%, Hong Kong’s 0.5%.

China stocks have had a difficult week with investors reeling from Monday’s brutal sell-off. Sentiment has been affected by a bleak industrial profit figure, and the spread of COVID-19 infections.

The European Central Bank raised interest rates on Thursday, but acknowledged that “substantial” progress was already made in its efforts to combat inflation.

The less hawkish comments from the ECB added to expectations that central banks are likely to slow their pace of rate hikes, especially after the Bank of Canada surprised the market by delivering a smaller-than-anticipated rate hike on Wednesday.

Rodrigo Catril of National Australia Bank (OTC) said that while the ECB did deliver a 75 bps rate increase as expected, it sounded less committed on future rate increases.

Catril said that the rate markets cheer the idea of a slowdown by central banks in terms the pace of interest rates hikes.

Now the focus is on the Bank of Japan’s Friday monetary policy decision. It is the only “dove”, among the major central banks in the world, and Governor Haruhiko Kojida’s post meeting briefing.

The central bank will keep the interest rates at an all-time low and remind markets that it will not be a central bank tightening monetary policies.

Core consumer inflation in Tokyo, Japan, was at its highest point in 33 years. It is considered a leading indicator for nationwide figures. Data from Friday showed that it reached 3.4% in October. The central bank’s target of 2% inflation in Tokyo has been exceeded for five consecutive months.

“We don’t believe this morning’s faster rate of inflation will alter the BOJ’s current policy decision,” ING economists wrote in a note. They added that Japan’s central banking has a different perspective than the ECB.

“If inflation is not driven demand-side factors, they won’t change their easy policy stance. It seems like they believe that this will preserve their credibility.” 

The BOJ’s incredibly easy policy has caused sharp yen drops that have inflated the cost of imports already expensive fuel and other raw materials. This has prompted the government to intervene on the market to support it.

The yen bought 146.47 for the last time, and was on track with a nearly 11% weekly gain, its largest since August. [/FRX]

Following a more-than 1% slide overnight following the dovish tone by the ECB, the euro was up 0.18% at $0.998

After gaining almost 0.8% overnight, the, which measures the greenback against an assortment of currencies, fell 0.1%.

Amazon.com (NASDAQ.) predicted a slowdown for holiday sales growth. Meanwhile, Intel (NASDAQ.) reduced its full-year profit forecast and revenue forecast, further fueling fears of an economic slowdown.

Amazon’s downbeat results Thursday were added to a series of disappointing reports from Big Tech firms, with more than $200 billion in U.S stock market value up in smoke during extended trade on the day. E-mini futures fell by 0.33%.

Futures dropped 42 cents, or 0.4% at $96.54 a bar at 0043 GMT. U.S. West Texas Intermediate crude futures fell 56 cents or 0.6% to $88.52 per barrel.

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