Asian Markets Fall Following Losses In New York, Japan Holds Rates Steady

Arjun Pandit
22 Sep, 2023
New York City

Market indexes in Asia rebounded and investors reacted to local news amid widespread selloff in Europe and in the U.S. 

In overnight trading, the S&P 500 index and the Nasdaq Composite index declined about 1.6% after smaller-than-expected weekly jobless claims suggested persistent tight labor market conditions. 

U.S. market indexes extended weekly losses to over 3% on the worries that the Federal Reserve is more likely to keep rates higher well into 2024. 

However, bargain hunting lifted market indexes in China but sentiment remained weak in India, Korea and Japan. 

The ongoing weakness in tech stocks kept the Nikkei down in Friday's trading and for the week and investors reviewed inflation data and rate decisions from the Bank of Japan. 

 

BoJ Holds Interest Rates 

The Bank of Japan left its key lending rate at -0.1% and maintained its ultra-loose monetary policy intact with its target range between 0% and 0.25% in an unanimous vote on Friday. 

 

Japan Consumer Inflation Slowed In August 

Japan's consumer price index edged lower to 3.2% on an annual basis in August, the Ministry of Internal Affairs and Communications reported Friday. 

Annual inflation dropped to a three-month low after a faster decrease in food prices of 12.3% from 9.6% overwhelmed the increase in food prices by 8.6% from 8.8% in the previous month. 

Core rate of inflation, which excludes volatile food and energy prices, was unchanged at a four-month low of 3.1%. 

On a monthly basis, consumer inflation increased 0.2%, slower than a three-month high 0.4% rise in July.   

 

Asia Market Indexes 

In Friday's trading, the Nikkei index decreased 0.3% to 32,486.52 following the persistent weakness in tech stocks all week. 

Market indexes in China rebounded after foreign investors appeared for bargain hunting. 

Foreign investors purchased 310 million yuan or $42 million on-shore listed stocks on Friday, the largest inflow in two weeks. 

Stock Connect data also showed foreign investors sold $15 billion of stocks in the previous six weeks. 

In China trading, the Shanghai SSE Composite index inched up 0.8% to 3,108.45 and the Hang Seng index increased 1.2% to 17,868.68 and the KOSPI index decreased 0.3% to 2,508.73. 

China's yuan edged slightly higher to 7.29 in offshore trading but hovered near a 16-year low after about $68 billion of capital outflow between July and August. 

The Sensex index declined 0.1% to 66,157.68 following the overnight decline in New York trading and elevated crude oil prices also kept resurgent inflation worries alive. 

In the week, the Nikkei index decreased 0.3%, the SSE Composite index declined 0.1%, the Hang Seng index fell 1.1%, the Sensex dropped 2.2% and the KOSPI index plunged 3.0%.