Most Asian stocks experienced declines on Tuesday, reflecting ongoing apprehension ahead of the Federal Reserve’s imminent meeting. Meanwhile, Japan’s Nikkei 225 index rebounded from early losses subsequent to the Bank of Japan’s decision to raise interest rates while maintaining a dovish stance.
Market sentiments remained subdued despite Wall Street’s positive performance overnight, with U.S. stock index futures dropping during Asian trading hours as gains in the technology sector tapered off.
Concerns lingered regarding the potential hawkish stance the Fed might adopt during its meeting. Although the central bank is anticipated to keep rates unchanged on Wednesday, there are speculations that it could adopt a more hawkish stance given the persistent inflationary pressures.
Nikkei 225 Recovers Ground Post BOJ’s Historic Move
Japan’s Nikkei 225 index witnessed a 0.3% increase, while the broader TOPIX index surged by 0.6% after mitigating a significant portion of their initial losses.
The Bank of Japan’s decision to raise interest rates by 0.1%, marking its first such move in 17 years, alongside indications of scaling back its yield curve control policies, including asset purchases from open markets, influenced the market dynamics.
However, the central bank emphasized the continuity of accommodative monetary conditions in Japan, citing concerns over the nation’s economic fragility.
While the BOJ’s move is historic, the monetary policy tightening remains marginal, preserving a substantial portion of liquidity that Japanese markets have enjoyed for nearly a decade.
Regional Central Bank Meetings Yield Varied Outcomes
Positive outcomes emerged from other regional central bank meetings. Australia’s ASX 200 index climbed by 0.3% after the Reserve Bank of Australia opted to maintain interest rates, albeit adopting a less hawkish tone than anticipated. The RBA eliminated its prior warning of potential interest rate hikes.
In China, both the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes experienced a 0.3% decline, influenced by mixed economic data from the preceding session. Additionally, Hong Kong’s Hang Seng index dropped by 1.2% due to losses in the technology sector.
The People’s Bank of China is expected to maintain its benchmark loan prime rate unchanged during the week.
Indian Market Struggles Amidst Record High Fallout
India’s Nifty 50 index retreated by 0.5%, struggling to rebound from a significant decline following its record highs. The downturn was exacerbated by weakness in heavyweight technology stocks, aligning with the global trend.
Tech, AI Stocks Falter Post Nvidia’s Chip Revelation
Major Asian technology stocks, particularly those involved in artificial intelligence, witnessed a downturn on Tuesday, mirroring a post-market decline in NVIDIA Corporation (NASDAQ:NVDA) shares after the company unveiled its latest line of AI chips, resulting in a nearly 2% drop in aftermarket trading.
South Korea’s KOSPI index suffered losses, with SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930) declining by nearly 4% and 1.4%, respectively.
In Japan, Advantest Corp. (TYO:6857), a supplier for Nvidia, saw a 2.7% decrease, while Tokyo Electron Ltd. (TYO:8035), the country’s leading chipmaker, experienced a 0.2% decline.
Nvidia’s introduction of its latest AI chips, dubbed Blackwell, at a developer conference on Monday failed to provide pricing insights, contributing to market uncertainties.
