Japan’s Nikkei 225 remained an outperformer among its peers, soaring 1.8 per cent to a 33-year high after the BoJ maintained its ultra-dovish policy and offered little sign on a potential pivot in 2024
Most Asian stocks rose on Wednesday, as expectations of lower U.S. interest rates and dovish signals from the Bank of Japan (BoJ) kept investors optimistic over a more accommodative environment in 2024.
Japan’s Nikkei 225 remained an outperformer among its peers, soaring 1.8 per cent to a 33-year high after the BoJ maintained its ultra-dovish policy and offered little sign on a potential pivot in 2024.
A dovish Bank of Japan has been a key point of support for the Nikkei this year, given that the bank largely contrasted its global peers by keeping interest rates at ultra-low levels. With Bank of Japan now showing little intent to tighten monetary conditions in 2024, Japanese stocks are set to enjoy accommodative conditions for longer.
Optimism over the Bank of Japan also helped Japanese stocks firm past weaker-than-expected imports and exports data for November, which heralded growing pressure on the economy from weak conditions in its biggest trading partners, namely China.
Chinese stocks lagged their peers for the day, after the People’s Bank of China kept its benchmark loan prime rate (LPR) unchanged in its final rate decision for the year.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped 0.4 per cent and 0.3 per cent, respectively, and were trading near their lowest levels for the year.
But wider Asian stocks were encouraged by a stronger overnight close on Wall Street, as U.S. stock benchmarks came near new highs.
The BOJ meeting this week also wrapped up all major central bank meetings for 2023, and set a dovish tone for the next year, which is likely to benefit risk-driven assets.
This notion boosted Asian stocks, although uncertainty over the timing of the Federal Reserve’s rate cuts somewhat limited gains. Some Fed officials also attempted to push back against expectations for an immediate interest rate cut in early-2024.
Hong Kong’s Hang Seng index rose 1.1 per cent on strength in energy and heavyweight technology stocks.
Australia’s ASX 200 gained 0.6 per cent to a 10-month high, amid growing optimism that the Reserve Bank of Australia was also done hiking interest rates. Advances in mining and bank stocks were the biggest boost to the ASX.
South Korea’s KOSPI gained 1.4 per cent on strength in heavyweight tech stocks, while futures for India’s Nifty 50 index pointed to a mildly positive open, as the index traded within sight of record highs.
