Losses in Asia against the backdrop of central bank movements

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Stock indices in the Asia-Pacific region are moving towards a loss of the upward momentum, “erasing” the gains that showed earlier in Tuesday’s session, with oil – at the same time – continuing its upward trend.

The market can not “get in the mood” from Wall Street, as the US stock markets remained closed on Monday due to a national holiday.

On the board, the Japanese Nikkei fell 0.27% to 28,257.25 points, with South Korea KOSPI to decline stronger, by 0.89%. In Hong Kong, the Hang Seng records losses of 0.74%, while, in mainland China, the Shanghai gains 0.80% and o Shenzen 0.19%. In Taiwan, the Taiwan Weighted closed with losses of 0.79%, while in Australia the S&P/ASX200 declined by 0.11%.

The Bank of Japan kept its key interest rate unchanged at -0.1%, exactly as analysts had predicted, and said it would make the necessary purchases of Japanese government bonds to keep the 10-year yield close to 0. %.

The Bank of Japan also revised upwards its inflation forecast: for the tax year beginning in April, the inflation forecast was revised from 0.9% to 1.1%. For the fiscal year 2023, the forecast was revised from 1% to 1.1%.

These levels remain below the BoJ target of 2%. In contrast to the US Federal Reserve, the BOJ said it would pursue loose monetary policy and quantitative easing “for as long as necessary” to meet the 2% inflation target.

In Hong Kong, technology stocks are on the rise, while in Australia, the financial sector, which is very important for the market, recorded losses.

Global interest rates continue to rise, reflecting the market’s expectation that central banks will tighten monetary policy faster, said Tapas Strickland, chief financial officer and market manager at National Australia Bank.

“Markets are already pricing four interest rate hikes by the Fed in 2022, and the estimate for the first rate hike by the European Central Bank has been moved earlier, in September 2022. The only exception here is the People’s Bank of China, PBOC “, which reduced interest rates by 10 basis points, amid uncertain prospects for growth in the country,” he wrote in a note on Tuesday.

Chinese President Xi Jinping rang the bell on Monday against an early interest rate hike that could derail the global recovery from the coronavirus pandemic.

“If the big economies abruptly brake or make a 180-degree turn in their monetary policies, there will be a lot of negative consequences,” he said in a teleconference conference on the Davos Agenda.

Mr Xi also called for an end to the “Cold War mentality”, which he said always had “catastrophic consequences”.


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