Asia report: Markets mixed after RBNZ's surprise big hike

Mixed performances were seen in Asia-Pacific stock markets on Wednesday, after a surprise outsized rate hike from New Zealand's central bank.

Hong Kong and mainland China's markets remained closed due to a public holiday.

“Asian equities are trading with a mixed tone after a less than convincing close on Wall Street, with the benchmarks all closing in the red as an initial decline in JOLTS job openings sparked a rally on the ‘bad news-good news’ play,” said TickMill market analyst Patrick Munnelly.

“However, market reaction faded rapidly as investors took the data as signs of a declining employment market leading to concerns about growth expectations, coming ahead of Friday’s nonfarm payrolls data, where most money centres are closed in observance of Good Friday.

“In the US investors will have a very limited window to hedge portfolios in the futures market ahead of an extended holiday weekend.”

Munnelly said the Reserve Bank of New Zealand’s surprise move was a “different tack” from its Antipodean neighbour in the RBA, raising interest rates by 50-basis points versus an expected 25-basis points.

“The Monetary Policy Committee expressed a rigid anchoring to their task of returning inflation to 1% to 3%.”

Markets mixed on quieter day for region

In Japan, the Nikkei 225 index dropped by 1.68% to close at 27,813.26, while the Topix declined by 1.92% to 1,983.84.

The declines in Tokyo were fueled by losses from Daiichi Sankyo, Taiheiyo Cement Corporation, and Komatsu, which dropped by 4.3%, 4.11%, and 4.1%, respectively.

South Korea's Kospi index rose by 0.59% to close at 2,495.21, with shares of Samsung SDI, Hanmi Pharmaceuticals, and Samsung Electro-Mechanics gaining by 7.16%, 5.2%, and 4.3%, respectively.

The S&P/ASX 200 index in Australia increased marginally by 0.02% to 7,237.20, with Bellevue Gold, Core Lithium, and Regis Resources rising by 8.37%, 8.08%, and 6.4%, respectively.

In New Zealand, the S&P/NZX 50 index declined by 0.27% to close at 11,866.83, with shares of Eroad, Serko, and Heartland Group dropping by 6.45%, 5.86%, and 4.32%, respectively.

On the currency front, the yen was last 0.16% stronger on the dollar at JPY 131.50, while the Aussie weakened 0.86% to AUD 1.4939.

The Kiwi initially strengthened in the wake of the interest rate decision, but was last off 0.12% against the greenback to change hands at NZD 1.5861.

In the oil market, Brent crude futures dropped marginally on ICE, by 0.08% to $84.86 per barrel, while the NYMEX quote for West Texas Intermediate declined by 0.05% to $80.67.

RBNZ surprises with bigger-than-expected rate hike

At the top of the agenda was the Reserve Bank of New Zealand surprising markets by increasing its benchmark interest rate by 50-basis points.

The move brought its official cash rate (OCR) to 5.25% - the highest level since 2008.

It cited persistent high inflation and employment beyond its maximum sustainable level as reasons for the rate hike.

The move came on the back of another 50-basis point increase from the RBNZ in February.

“If the Reserve Bank of New Zealand is any indication of the future of the global tightening cycle, the tightening is apparently not coming to an end,” said Swissquote Bank senior analyst Ipek Ozkardeskaya.

“The RBNZ surprised today with a 50-basis point hike, versus a 25-basis point hike expected by analysts.

“The bank pointed at high inflation and strong employment, and said that there is no conflict between lowering inflation by raising rates and financial stability.”

Ozkardeskaya said the decision in Wellington poured cold water on dovish Fed expectations in Asia, as inflows into US treasuries also slowed and reversed.

Across the Tasman Sea, Reserve Bank of Australia governor Phillip Lowe said its pause in interest rate hikes on Tuesday did not signal an end to rate increases.

Lowe noted that the decision was made to assess the economic outlook and the impact of previous interest rate hikes.

He said further tightening of monetary policy might still be needed to bring inflation levels down to the Bank’s 2% to 3% target.

Elsewhere, Japan’s services sector expanded for the seventh consecutive month, with the au Jibun services purchasing managers index (PMI) reaching 55 in March, from 54 in February.

The country also saw a rise in new business volumes, while input inflation eased to a 12-month low.

Singapore's retail sales in February rose 12.7% year-on-year, following a decline in January, partly attributed to the Chinese New Year public holidays.

Finally, inflation in Thailand was lower than expected in March, with headline inflation at 2.83% and core inflation at 1.75%, while headline inflation in the Philippines for March fell slightly to 7.6%.

Reporting by Josh White for Sharecast.com.