Asia report: Stocks make gains as BoJ keeps rates on hold

Markets in the Asia-Pacific region ended the trading week on a strong note, with most indices closing in the green on Friday.

The moves came after the Bank of Japan decided to hold its benchmark interest rate at -0.1%, in line with expectations.

“Asian equity markets traded higher, taking cues from the gains on Wall Street,” said Patrick Munnelly at TickMill.

“Initially cautious ahead of the Bank of Japan policy decision, the Nikkei 225 in Japan experienced a slight decline but recovered after the BoJ maintained its ultra-easy policy settings.

“China's plans to revive the economy, including potential infrastructure spending and relaxed rules for the property sector, provided support.”

Equity markets make gains across the region.

In Japan, the Nikkei 225 rose 0.66% to finish at 33,706.08, while the broader Topix index was also up by 0.28% closing at 2,300.36.

Market leaders Shiseido, Canon, and Nikon Corporation saw their stock prices increase by 5.27%, 4.93%, and 4.48% on Tokyo’s benchmark, respectively.

Chinese markets also ended on a positive note, as the Shanghai Composite Index rose by 0.63% to 3,273.33, while the Shenzhen Component posted a stronger 1.11% gain.

Notable winners in Shanghai included Aerospace Auto and Changchun Yidon Clutch, both rallying by an impressive 10.04%.

Hong Kong's Hang Seng Index rose 1.07% to end at 20,040.37, with the leaders including Country Garden Services, up by 4.17%, Wharf Real Estate, which added 3.86%, and CSPC Pharma, higher by 3.41%.

South Korea's Kospi also enjoyed positive returns, up 0.66% to 2,625.79, as shares of Hanwha Ocean soared by 11.99%, and SK Biopharma also posted a solid gain of 7.52%.

Australian markets followed suit, with the S&P/ASX 200 increasing by 1.06% to 7,251.20.

AGL Energy and Whitehaven Coal led the gains in Sydney, with rises of 9.73% and 8.27%, respectively.

New Zealand's S&P/NZX 50 closed up 0.96% at 11,800.04, with Vista Group and Stride Property making notable gains of 6.75% and 2.99%, respectively.

On the currency front, the yen was last 0.52% weaker on the dollar to trade at JPY 141.02, while the Aussie slipped 0.03% to AUD 1.4529.

The Kiwi was 0.05% stronger on the greenback, however, changing hands at NZD 1.6035.

In commodities, Brent crude futures were last up 0.03% on ICE at $75.69 per barrel, while the NYMEX quote for West Texas Intermediate was down 0.04% at $70.59.

Bank of Japan maintains its uber-easy monetary policy

In economic news, Japan's central bank sustained its ultra-accommodative monetary policy stance on Friday, reinforcing a fragile economy amidst rising global instability.

As expected by economists, the Bank of Japan maintained its short-term interest rate at -0.1%, refraining from adjustments to its yield curve control measures.

"The BoJ probably will view subdued real wages as evidence that Japan is still a way off from entering a self-sustaining domestic recovery that can generate persistent demand-push inflation above 2%,” said Duncan Wrigley at Pantheon Macroeconomics.

“The domestic recovery is only gradually broadening from tourism to other services sectors and manufacturing, and moreover the second-half global outlook is gloomy.

“Governor Ueda has warned of the danger of tightening too early and setting back Japan’s progress towards sustainable 2% inflation, which he sees as a greater risk than that of tightening too late.

“As such the Bank is likely to keep rates on hold for the rest of the year.”

In Hong Kong, a significant shift was observed in the producer price index, which ascended 1% in the first quarter compared to the same period last year.

That sharp upturn contrasted with the 0.4% decrease recorded in the final three months of 2022.

The city's census bureau attributed the steepest price increases to paper products, which experienced a 3.7% year-on-year rise.

Other industries noting price escalations included the food, beverage and tobacco sector, in addition to the metal and electronics industries.

Meanwhile, in New Zealand, manufacturing activity continued its downward trend for the third consecutive month.

The country's purchasing managers index (PMI) came in at 48.9 in May, marginally outpacing April's reading of 48.8.

It still, however, marked the ninth successive month that the measure languished below its long-term average of 53.

The contraction in factory activity came on the back of New Zealand's entry into a technical recession.

New Zealand's GDP for the first quarter demonstrated a 0.1% contraction year-on-year, marking a second consecutive month of negative GDP growth.

Reporting by Josh White for Sharecast.com.