BANGKOK (AP) – Shares were mixed in Asia yesterday after a modestly higher close on Wall Street as concerns over pressures on global growth tempered gains in the absence of major data releases.
Tokyo’s benchmark Nikkei 225 index slipped 0.2 per cent, to 26,387.72, a day after the Bank of Japan (BOJ) gave in to pressure on the yen by expanding the cap on the yield of the 10-year Japanese government bond to 0.50 per cent. It had been 0.25 per cent.
On Tuesday, the Nikkei 225 lost 2.5 per cent.
The slight softening of the Japanese central bank’s opposition to raising interest rates to cut inflation rattled world markets on Tuesday, with bond yields pushing higher. The BOJ has kept its key lending rate at minus 0.1 per cent for years, trying to spur growth by keeping credit ultra cheap.
Higher yields make borrowing more expensive, which slows the economy and can alleviate upward pressure on prices, while at the same time pulling prices for stocks and other investments lower.
The widening gap between the BOJ’s benchmark rate and rising interest rates in the US and other economies has pulled the value of the yen sharply lower, causing prices for imported oil, consumer goods and industrial inputs to surge and adding to pressures on its economy.
“Ultimately, the BOJ is reacting to a dysfunctioning bond market and a weakening yen. But the move also represents the fall of one of the last central bank hold-outs of ultra-low rate policy,” Stephen Innes of SPI Asset Management said in a commentary.
Central banks around the world have been raising rates at an explosive clip and a growing number of economists and investors see a recession hitting in 2023. Both the Federal Reserve and European Central Bank have pledged to keep raising rates into next year to be sure they get inflation under control.
At the same time, fresh waves of COVID-19 infections in China, Japan and other countries are casting a shadow over pandemic recoveries.
In other Asian trading, Hong Kong’s Hang Seng inched up less than 0.1 per cent to 19,103.10 and the Shanghai Composite index slipped 0.3 per cent to 3,065.78.
South Korea’s Kospi lost 0.2 per cent to 2,328.95. In Sydney, the S&P/ASX 200 gained 1.3 per cent to 7,115.10. Shares rose in Bangkok and Taiwan but fell in Mumbai.
On Tuesday, the S&P 500 rose 0.1 per cent after flipping between small losses and gains in the early going. It closed at 3,821.62.
