Bank of Japan Holds Near Zero Rate Policy, China's Covid Flare-up Worries Dent Sentiment

Arjun Pandit
18 Jan, 2023
Mumbai

Asian markets closed mixed after indexes soared in Tokyo but sentiment was cautious in China trading. 

Stocks in Japan soared after the Bank of Japan held its interest rate policy and yield curve control, dashing all hopes of ending its ultra-low rate stance. 

The central bank said it will hold rates at zero percent, with a band of 50 basis points or plus or minus 0.5%, and it will continue to buy unlimited amount of 10-year Japanese government bonds. 

The central bank will maintain its short term interest rates at -0.1%. 

Last month when the Bank of Japan widened its band to 50 basis points from 25 basis points, investors raised hopes that the bank is finally prepared to lift rates higher and end its decades old ultra-low rate policy. 

The Bank of Japan is likely to leave rates and its short term stance unchanged for the rest of the term of Governor Haruhiko Kuroda term, which ends in April. 

The Nikkei index soared 2.5% to 26,791.12 and the yen was nearly unchanged at 128.32 against the U.S. dollar. 

 

China Indexes Lacked Direction 

Stocks in China lacked direction on the rising worries that the covid-infections are likely to flare-up in rural and urban areas after the ending of holiday period. 

Tech stocks led the gainers in Hong Kong after regulatory crackdown appear to be waning. 

The Shanghai Composite index increased 0.1% to 3,224.41 and the Hang Seng index advanced 0.5% to 21,678.0. 

 

Sensex Extended Gains to Second Day 

Stocks in Mumbai rose for the second day in a row following the market advance in Japan and market sentiment improved on the hopes of stronger-than-anticipated domestic demand.  

The Sensex index advanced 0.6% or 390.02 points and the Nifty index added 0.6% or 112.05 to 18,165.35.