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Bank of Japan's policy shift spurs Nikkei 225, mixed reactions in global markets

Published 11/02/2023, 05:54 AM
© Reuters.
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In a significant policy shift, the Bank of Japan has eliminated its 10-year bond yield ceiling of 1%, a move reminiscent of the Alan Greenspan era. This decision has challenged the central bank 'put' concept and sparked a 2.4% surge in the Nikkei 225, leading the Asia-Pacific markets today.

However, the reaction in other Asian markets was mixed. Indices such as Shanghai, ASX 200, and Kospi also saw increases, while Hang Seng, SENSEX, and Nifty50 experienced decreases. The Kospi index rebounded by 1% after South Korea reported a 5.1% year-on-year increase in October exports despite a deeper contraction in factory activity. Australia's ASX 200 strengthened by 0.9%.

Asian currencies varied too with AUDUSD and NZDUSD rising while USDJPY and USDCNY fell. Precious metals like Gold and Silver decreased in value.

Meanwhile, China's CSI 300 dipped as the Caixin/S&P Global manufacturing PMI contracted, reflecting data from China's National Bureau of Statistics and missing forecasts. Despite this contraction, Taiwan's Taiex gained 0.2%, Singapore's Straits Times Index rose by 0.3%, and New Zealand's NZX 50 soared by 0.9%.

In Europe, central bank policymakers are considering reducing the interest rates on government cash deposits to combat inflation-induced losses. Despite this contemplation, European stock markets performed well.

In the U.S., the Federal Open Market Committee unanimously decided to maintain the key federal funds rate in a target range between 5.25%-5.5%. An upgrade to the committee’s general assessment of the economy was also included. This decision is drawing global investor attention as it keeps interest rates steady.

The ADP National Employment Report indicated that private sector payrolls in the U.S. rose by 113,000 in October, higher than September but below Dow Jones' consensus estimate of 130,000. Despite this shortfall, U.S. market closings saw Dow, S&P 500, Nasdaq, and Russell 2000 advancing.

In Canada, TSX Composite and TSX 60 advanced, while Brazil's Bovespa also advanced. The oil markets had a mixed day with Crude Oil, Brent, Natural Gas, and Gasoline decreasing while Heating oil increased.

The bond market data showed Japan 0.957%(+0.6bp), US 2’s 5.01% (-0.065%), US 10’s 4.8056%(-6.94bps); US 30’s 4.98% (-0.044%), Bunds 2.761% (-4.6bp), France 3.378% (-5.2bp), Italy 4.675% (-5.1bp), Turkey 26.50% (+13bp), Greece 4.327% (+16.7bp), Portugal 3.455% (-5.6bp), Spain 3.836% (-5bp) and UK Gilts 4.493% (-2.2bp).

Top commodity gainers were Milk, Tea, Rapeseed, and Zinc while top losers were Coffee, Oat, Coal, and Natural Gas.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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