Most Asian stocks were subdued on Thursday, with notable declines in Japanese shares following the Bank of Japan’s (BOJ) unexpected hawkish stance and a stalled rebound in Chinese markets due to disappointing business activity data.
Japanese Shares Decline
Japan’s Nikkei 225 and TOPIX indexes fell sharply by 3.1% and 3.8%, respectively, after the BOJ’s recent meeting. Governor Kazuo Ueda indicated that the central bank plans to continue raising interest rates, especially if economic and inflation conditions align with the BOJ’s outlook. This stance was a shift from the earlier dovish tone, which had initially led to a positive reaction in Japanese stocks.
Ueda’s comments included a statement on the bank’s willingness to raise rates beyond 0.5% if necessary, which contributed to the negative sentiment in the market. The BOJ’s benchmark short-term rate stood at around 0.25% following Wednesday’s 15 basis point hike.
Stalled Chinese Market Rebound
In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes remained relatively flat after rebounding from five-month lows in the previous session. The Hang Seng index in Hong Kong fell by 0.2%.
The Caixin purchasing managers’ index (PMI) for manufacturing revealed an unexpected contraction, exacerbating concerns over a broader economic slowdown. This data followed similar negative trends from government PMI reports. Although previous comments from Beijing had raised hopes for more stimulus, persistent caution regarding China’s economic outlook kept investors wary.
Regional Market Movements
Despite the overall mixed sentiment, some regional markets showed positive movement:
Australia’s ASX 200 rose 0.4%, briefly hitting a record high at 8,148.70 points. Soft inflation readings prompted a rally on Wednesday.
South Korea’s KOSPI increased by 0.4%, with local chipmaking stocks tracking gains in their U.S. counterparts. Shares of TSMC in Taipei rose nearly 2%.
India’s Nifty 50 futures indicated a flat opening, with the index struggling to break new highs above 25,000 points.
U.S. Market Outlook
U.S. stock index futures were up in Asian trade, reflecting optimism from Wall Street’s recent rally. This rally was fueled by expectations of a potential September interest rate cut by the Federal Reserve and strong earnings reports from technology companies. Investors are now focusing on upcoming earnings from major tech firms like Apple Inc. and Amazon.com Inc.
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