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BANGKOK — Stocks in Asia were mixed on Wednesday after a slightly higher close on Wall Street, as concerns about pressure on global growth dampened gains in the absence of key data releases.
Tokyo’s benchmark Nikkei 225 index fell 0.2% to 26,387.72, a day after the Bank of Japan eased pressure on the yen by raising its 10-year government bond yield cap to 0.50%. It had been 0.25%.
On Tuesday, the Nikkei 225 lost 2.5%.
Slight easing in the Bank of Japan’s resistance to raising interest rates to lower inflation rattled global markets on Tuesday, with bond yields pushing higher. The BOJ has kept interest rates at minus 0.1% for years and is trying to boost growth by keeping credit ultra-cheap.
Higher yields make borrowing more expensive, which slows the economy and can alleviate upward pressure on prices while pushing down the prices of stocks and other assets.
The widening gap between the BOJ’s policy rate and rising interest rates in the US and other economies has pulled the yen’s value sharply lower, causing imported oil, consumer and manufactured goods prices to rise, putting additional pressure on the economy .
“Ultimately, the BOJ is reacting to a dysfunctional bond market and a weakening yen. But the move also represents the overthrow of one of the last central bank holdouts on ultra-low interest rates,” SPI Asset Management’s Stephen Innes said in a comment.
Central banks around the world have explosively hiked interest rates, and a growing number of economists and investors see a recession in 2023. Both the Federal Reserve and the European Central Bank have pledged to hike interest rates into next year to ensure that they do inflation under control.
At the same time, fresh waves of COVID-19 infections in China, Japan and other countries are casting a shadow over the pandemic’s recovery.
Elsewhere in Asia, Hong Kong’s Hang Seng rose less than 0.1% to 19,103.10 and the Shanghai Composite Index slipped 0.3% to 3,065.78.
South Korea’s Kospi slipped 0.2% to 2,328.95. In Sydney, the S&P/ASX 200 was up 1.3% to 7,115.10. Stocks rose in Bangkok and Taiwan but fell in Mumbai.
On Tuesday, the S&P 500 was up 0.1% after initially bouncing between small losses and gains. It closed at 3,821.62.
The Dow Jones Industrial Average rose 0.3% to 32,849.74 and the Nasdaq Composite was little to move after closing less than 0.1% higher at 10,547.11. Small company stocks outperformed the broader market, pushing the Russell 2000 Index up 0.5% to 1,748.02.
The muted gains were enough to end a four-day losing streak for the major indices.
The 10-year Treasury yield rose to 3.70% from 3.59% late Monday. That yield helps set interest rates on mortgages and other economic borrowing, which has already caused particular pain to the US housing market.
A report on Tuesday showed that US homebuilders commissioned fewer homes in November for the third straight month. Meanwhile, the number of building permits fell to its lowest level since June 2020, when the pandemic froze the economy.
Two-year US Treasury yields were more dovish, tending to be more in line with expectations for Federal Reserve action. It remained stable at 4.26%.
In the foreign exchange market, the dollar rose to 132.09 Japanese yen from 131.62 yen. Tokyo’s surprise move on Tuesday dragged the dollar down 4% against the yen.
The euro fell from $1.0626 to $1.0615.
U.S. benchmark crude was up 12 cents in electronic trading on the New York Mercantile Exchange to $76.35 a barrel. On Tuesday it gained 1.2%.
Brent crude, the price basis for international trade, rose 26 cents to $80.25 a barrel.
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