In Japan, the stock market reached a new all-time high following the Bank of Japan’s key interest rate decision. Overall, however, the mood on the Asian stock exchanges is mixed.
The Asian stock markets did not show a consistent picture on Tuesday. While the Japanese Nikkei 225 temporarily jumped over the threshold of 70,000 points for the first time after the central bank’s interest rate decision, but then fell back slightly below the round mark and is now 0.19 percent higher at 69,446.76 points, weak data in China is weighing on it: the Shanghai Composite is temporarily at 4,095.58 points below the previous day’s level (-0.02 percent).
In South Korea, the rally in semiconductor stocks is driving the technology-heavy KOSPI up: it temporarily rose 2.11 percent to 8,726.60 units.
The hope of an end to the Iran war had already buoyed the regional stock markets the day before, but tends to still have a bit of an impact. “The US and Iran are close to an agreement, although the details are still important,” say OCBC analysts.
No surprise: interest rates in Japan at 31-year high
The Bank of Japan has raised interest rates to a 31-year high, addressing inflation risks from war-related increases in energy costs. The central bank raised its key interest rate from 0.75 percent to 1 percent, bringing borrowing costs to their highest level since 1995. The decision was widely expected by investors and economists and was already almost fully priced in by the markets.
Economists say further interest rate hikes could prove difficult. It was also decided to interrupt the reduction in purchases of government bonds from April 2027.
Chinese economy is stalling
In China, retail sales and investment in fixed assets fell more than expected. The latter reached its lowest level since the COVID pandemic. Data shows that China’s economy continues to stall as domestic demand slows.
Property prices continued their downward spiral in May. This exacerbates the real estate crisis, which continues to place a significant burden on domestic demand. Industrial production represents a bright spot and rose slightly more than expected thanks to strong foreign demand.
Carolin Ludwig, Alexandra Hesse, finanzen.net editorial team with material from Dow Jones Newswires
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