BOJ Bond Purchase Plans Shake Asian Indices: Market Focus

Asian markets mixed as BOJ signals potential bond purchase reduction; Nikkei gains, Hang Seng and ASX fall.

Asian stock markets exhibited a mixed performance today as the Bank of Japan (BOJ) announced it might reduce its bond purchases while keeping its benchmark interest rate unchanged. The Nikkei 225 increased by 0.36%, the Shanghai Composite saw a slight increase of 0.04%, and the Hang Seng declined by 0.59%. Australia’s ASX fell by 0.27%.

Commodities and Bond Yields

In commodities, gold climbed to $2,323.5, marking a 0.27% increase, and silver rose to $29.48, up by 0.11%. Conversely, Brent oil dropped to $82.53 and WTI oil fell to $78.11, decreasing by 0.39%.

Bond yields showed stability, with the US 10-year yield at 4.25%, the UK 10-year yield at 4.16%, and the Germany 10-year yield at 2.46%.

Economic Data

The latest US economic data revealed that the Core Producer Price Index (PPI) remained flat month-on-month against an expected rise of 0.3%. The PPI decreased by 0.2% compared to an anticipated increase of 0.1%, and unemployment claims surged to 242,000, exceeding the expected 225,000.

BOJ Bond Purchase Plans Shake Asian Indices: Market Focus

Market Reactions

The BOJ’s decision to potentially reduce its bond purchases after its next monetary policy meeting on July 30 and 31 comes as it currently aims to buy about 6 trillion yen ($38.5 billion) in bonds monthly, with plans to adjust this range between 4.8 trillion yen and 7 trillion yen per month.

This announcement influenced various Asian indices. Japan’s Nikkei 225 reversed early losses to gain 0.36%, and the Topix index increased by 0.78%. South Korea’s Kospi rose by 0.32%, although the smaller cap Kosdaq fell by 1.14%. The S&P/ASX 200 declined by 0.27% in Australia, while Hong Kong’s Hang Seng index decreased by 0.59%. The CSI 300 index in mainland China slipped by 0.4%.

Global Markets

The S&P 500 recorded its fourth consecutive record close in the United States, rising by 0.23% to finish at 5,433.74. The Nasdaq Composite also advanced, gaining 0.34% to close at 17,667.56, marking its fourth straight record closing. However, the Dow Jones Industrial Average lagged, dropping by 0.17%.

Data suggesting a cooling in inflation pressures bolstered the record highs for the S&P 500 and Nasdaq, providing a positive outlook for investors.

Upcoming Economic Events

Authorities have scheduled several key economic events for later today:

• 12:30 PM GMT: CAD Manufacturing Sales m/m
• 12:30 PM GMT: CAD Wholesale Sales m/m
• 12:30 PM GMT: USD Import Prices m/m
• 2:00 PM GMT: USD Prelim UoM Consumer Sentiment
• 2:00 PM GMT: USD Prelim UoM Inflation Expectations

Investors will closely monitor these releases for further indications of economic trends and potential impacts on global markets.

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