Central Bank Decisions Steer Asian Equities: Nikkei Bounces Back Amidst BOJ's Steadfast Stance

Infotrading.io - Markets across Asia presented a mix of green and red on Friday. The prevailing sentiment was of caution, as central banks around the globe hinted at maintaining higher interest rates for extended periods.

The aftershock of the Federal Reserve's unexpectedly hawkish stance this week left its mark on regional markets. Similar warnings echoed from the European Central Bank and the Bank of England. These declarations challenge risk-driven assets universally, with higher rates potentially limiting foreign capital influx into Asia and thus dampening prospects for local equities.

Japan’s Nikkei 225 index demonstrated some resilience, paring down its early losses to trade only 0.4% lower by 23:16 ET. This recovery was largely attributed to the Bank of Japan’s (BOJ) decision to stand pat on its monetary policy. Despite the rising inflation, the BOJ maintained its negative rates and steady stimulus measures. This move, contrary to some investors' anticipations of hawkish hints, kept markets relatively calm. All eyes are now on Governor Kazuo Ueda's upcoming address. His recent mentions about potentially stepping away from negative rates have sparked interest, especially as inflation statistics indicate persistent heat.

Contrary to the Nikkei, Australia’s ASX 200 felt the weight, primarily due to declining commodity prices, and ended the week 3.7% lower. South Korea's KOSPI and India's Nifty 50 also faced challenges. Nifty's descent was accelerated by rising diplomatic tensions between India and Canada. Meanwhile, Chinese stocks presented a brighter picture for the day, though they too remain subdued week-on-week, awaiting more stimulus actions from Beijing.

In the Southeast Asian spectrum, both the Philippine and Indonesian markets inched upwards, a result of their central banks' decisions to retain current interest rates.