Asian stocks mixed ahead of central bank meetings

Nikkei 225 and TOPIX indexes moved in a flat-to-low range before the conclusion of a Bank of Japan meeting

Asian stocks were mixed on Tuesday in anticipation of interest rate decisions at the Bank of Japan and the Reserve Bank of Australia.

South Korean shares outperformed, aided by an extended rally in chipmakers and tech stocks. Hong Kong and Chinese shares lagged following a round of weak economic numbers from the mainland.

Nikkei 225 and TOPIX indexes moved in a flat-to-low range before the conclusion of a Bank of Japan meeting where the central bank is widely expected to hike interest rates by 25 basis points to 1%.

The BOJ had indicated a potential hike, citing growing inflationary risks from higher energy prices and steady spending.

BofA analysts said Tuesday’s rate hike was largely priced in, with focus now turning to what the BOJ will signal for the coming quarters.

Fears of rising inflation and sustained weakness in the yen are expected to elicit a hawkish outlook from the BOJ.

ASX 200 dropped 0.4%, weighed by losses in mining and bank stocks.

The Reserve Bank of Australia is widely expected to leave interest rates unchanged at the conclusion of a meeting later on Tuesday, after raising rates by a cumulative 75 basis points this year.

The central bank had signalled during its last meeting that it now planned to hold and watch for the economic impact of its recent rate hikes. But any signs of Australian inflation are likely to invite more monetary tightening by the RBA.

KOSPI was the best performer in Asia, adding 1.5% on sustained gains in tech and chipmaking stocks.

Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were flat after mostly weak economic prints for May. Retail sales and fixed asset investment both declined more than expected, with the latter hitting its lowest levels since the COVID-19 crisis.

Industrial production was a bright spot, rising slightly more than expected on strong overseas demand.

Tuesday’s data showed the Chinese economy remained largely on the backfoot amid slowing domestic consumption.