Asian Markets Rested Ahead of Fed Action, Japan's Trade Shrank, China Holds Rates

Arjun Pandit
20 Sep, 2023
New York City

Popular indexes in Asia dropped ahead of rate decisions from several central banks this week. 

Global market sentiment was weak ahead of interest rate decisions from the U.S. Federal Reserve, the Bank of England and the Bank of Japan. 

Sweden, Norway and Switzerland are also set to announce their rate decisions this week. 

The Bank of Japan is expected to leave its  ultra-loose monetary policy intact but some investors are hoping that policymakers will provide better insights on future rate patch and inflation pressures in the economy. 

Market sentiment was weak on the worries of a rebound in inflation and uncertainty about interest rates in the U.S. and Europe and looming global slowdown. 

Higher oil prices weighed on the market sentiment after Brent crude oil price jumped above $95 a barrel after Saudi Arabia and Russia extended voluntary production cuts to the end of 2023. 

 

China Holds Rates 

The People's Bank of China also announced its monthly rate decisions as the overall outlook for the economy remains uncertain. 

China's one-year loan prime rate, used for consumer and corporate lending, was held at 3.45% and 5-year loan prime rate, reference rate for mortgage lending, was left unchanged at 4.2%.  

 

Japan's International Trade Shrank In August 

Japan's imports declined for the fifth month in a row and fell at the fastest pace after energy cost declined. 

Japan's imports declined 17.8% from a year ago to ¥8,924.82 billion in August following a 13.6% decline in July, data from Finance Ministry showed today. 

Imports from China declined by 12.1%, the U.S. by 9.5%, Hong Kong by 20.8%, South Korea by 10.8%, Malaysia by  30.0%, India by 9.4%, Australia by 41.6%, and Russia by 62.5%, but increased from Germany by 7.9%. 

Japan's exports decreased for the second month in a row in August, largely because of weak demand from China. 

Exports decreased 0.8% from a year ago to ¥7,994.35 billion. 

Exports declined to China by 11.0%, Taiwan by 14.3%, South Korea by 10.8%, Singapore by 24.6%, Australia by 10.6%, and Russia by 57.6% but increased to the U.S. by 5.1%, India by 16.2%, and the EU by 12.7%. 

Japan reported trade deficit of ¥930.48 billion in August, second monthly deficit in a row, and the shortfall jumped from ¥66.3 billion in July, despite rising automobile exports to the U.S. 

Japan has recorded monthly trade deficit for two years in a row barring June 2023. 

The latest decline in exports was driven by a decline in food exports after its largest trading partner China impose ban on Japanese seafood in late August.   

Japan's trade surplus with the U.S. surged 38.2% to ¥650.60 billion. 

Exports increased 5.1% to record August-high of ¥1.62 trillion but imports decreased 9.5% to ¥967.39 billion.

 

Asia Market Indexes 

In Wednesday's trading, the Nikkei index decreased 0.7% to 33,023.78 and tech stock weakness extended to the third day in a row. 

Market indexes in Hong Kong declined to a 4-week low as investors await the Fed's rate decision and economic projections later today. 

Two new stocks started trading on the Shanghai Stock Exchange on Wednesday after completing their initial public offerings. 

Jilin Joinature Polymer jumped 11% to 32.79 yuan and Hunan Sund Technological advanced 26% to 83.86 yuan. 

In China trading, the Shanghai SSE Composite index inched down 0.5% to 3,108.57 and the Hang Seng index decreased 0.5% to 17,908.48 and the KOSPI index increased 0.02% to 2,559.74.

China's yuan has been trading near a 16-year low after about $68 billion of capital outflow between July and August. 

Stocks in Mumbai fell sharply on the worries of resurgent inflation after crude oil prices jumped to a one-year high. 

The Sensex index decreased 561.19 points to 67,043.80 and the Nifty index declined 165.40 points to 19,968.30. 

On the Bombay Stock Exchange, 226 stocks traded at their 52-week highs and 138 traded at their 52-week lows. 

In August, the Nikkei index fell 0.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.