Nikkei shares fall as BOJ doesn't change monetary policy, but the index recovers some of its losses.
Stock Market News
Dated:- 22-09-2023
However, the Nikkei in Japan recovered some of its early losses when the Bank of Japan made no adjustments to its ultra-dovish policy, while most other Asian stock markets traded flat to lower.
In a more hawkish tone than predicted this week, the Federal Reserve cautioned that interest rates will remain high for a longer period of time, sending regional markets plunging.
Global risk-driven assets were hit hard by similar warnings from the European Central Bank and the Bank of England. A weakening prognosis for local equities can be seen in Asia as higher rates discourage the inflow of foreign money.
As inflation rises, the BOJ has made no adjustments.
As of Friday 23:16 ET, the Nikkei 225 index has fallen 0.4% after plunging as much as 1% earlier in the day.
Some investors were hoping for hawkish indications from the BOJ, but the central bank instead maintained its zero interest rate policy and confirmed it will maintain its current pace of support.
The spotlight has shifted to Governor Kazuo Ueda's post-meeting presentation after he said in a recent interview that the bank had amassed enough data to consider a shift away from negative interest rates.
Ueda made these remarks as wages in Japan were beginning to rise, despite persistently high inflation. According to figures released on Friday, core inflation in Japan increased slightly more than forecast in August, although overall rates remained above 40-year highs.
The termination of the BOJ's easy monetary policy, which has benefited Japanese stocks for nearly a decade, would cause significant market disruptions.
It was also revealed on Friday that the industrial sector in Japan had declined even further in September, according to preliminary data.
The decline in commodity prices has weighed on mining equities, which contributed to a 0.6% drop on Australia's ASX 200. This week, the ASX was among the worst performers, falling 3.7%.
Futures for India's Nifty 50 index pointed to a bullish open, while South Korea's KOSPI dropped 0.3% from earlier this week's record highs. An escalating diplomatic confrontation between India and Canada over the alleged execution of a Sikh secessionist leader also weighed on investor sentiment towards the Nifty.
The Shanghai Shenzhen CSI 300 index and the Shanghai Composite index were among the day's few bright spots, rising 0.9% and 0.7%, respectively.
The Hang Seng gained 1.3% after news spread that the Hong Kong government was planning to release additional liquidity measures to assist local equities.
With mounting impatience awaiting fresh stimulus measures from Beijing, Chinese markets continued to trade down for the week. It came as no surprise earlier in the week when the People's Bank did not change its loan prime rates.
As expected, central banks in Southeast Asia held interest rates steady on Thursday, sending stock markets in the Philippines and Indonesia higher.
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