JAPAN & HONG-KONG: Asia stocks mixed as Bank of Japan’s policy shift reverberates

Asian stock markets opened with mixed signals on Wednesday as investors approach the end of one of the worst years for stocks and bonds in more than a decade. The yen held gains after Bank of Japan’s policy shift

Equities in Asia were mixed Wednesday as investors approach the end of one of the worst years for stocks and bonds in more than a decade. The yen held gains in the aftermath of the Bank of Japan’s policy shift.

Australian shares and Hong Kong equity futures advanced. Japanese shares fell, as did a gauge of US-listed Chinese companies. US share futures climbed after the S&P 500 rose. The tech-heavy Nasdaq 100 fell slightly as markets continued to digest last week’s hawkish commentary from the Federal Reserve and European Central Bank.

The yen steadied after its biggest one-day jump since 1998 on Tuesday to climb almost 4% against the dollar. The action followed a surprise decision by the BOJ to let yields on 10-year government bonds trade up to 0.5%, from a previous ceiling of 0.25%. Japanese bank stocks rose, bucking the broader trend in the nation’s equities, on expectations that rising interest rates will boost their profitability.

Many economists now expect the BOJ to raise interest rates next year, joining the Fed, the ECB (External commercial borrowings)and others after a decade of extraordinary stimulus. 

Fresh data indicating a cool down in the US housing market offered some respite to the outlook for inflation in a year marked by quickly rising interest rates that weighed on stocks and bonds. Global equities have fallen by a fifth in 2022, on pace for their worst year since 2008. A Bloomberg index of global bonds has tumbled by 16%, by far the largest decline on an annual basis since the benchmark began in 1990.