Following a four-day winning streak, the Nikkei 225 and Topix indices both dropped 0.12% to settle at 27,362.75 and 1,978.40, respectively, on Thursday.
Investors became cautious as the market became overbought and as ongoing global economic uncertainty weighed on sentiment. While focusing on the necessity to maintain an accommodating monetary policy, officials at the Bank of Japan’s January meeting discussed the forecast for inflation and the possibility of a sustainable increase in wages.
With substantial losses from Tokyo Electron (-1.8%), Advantest (-2.2%), and Keyence (-1.6%), technology companies led the decline. Other index heavyweights, including as Mitsubishi UFJ (-1.1%), Nippon Yusen (-2.4%), and Sony Group (-1.3%), also experienced declines.
The markets in Australia and India are closed today. Yesterday, US short seller Hindenburg Research LLC targeted Adani Group with allegations of manipulation and fraud. The markets in mainland China are still shut.
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Along with the news that shares in Asia rose as Hong Kong dealers resumed trading after the Spring Festival vacations, a gain in US stock futures also improved confidence. The Hang Seng increased by 464.63 points or 2.11 % to over 9-month high, to close at 22,509.28 on Thursday as traders caught up to other market gains after returning from the Lunar New Year holidays.
The New Zealand stock market advanced for the second straight day on Thursday, rising 28.95 points or 0.24% to close at 12,023.46. This was the highest close since early April 2022, and it was fueled by the country’s new prime minister Chris Hipkins’ Wednesday promise to take action to lower persistently rising prices and stabilise the economy.
According to recent data, New Zealand’s annual inflation rate in the fourth quarter of 2022 remained at its highest level since 1990. In the meantime, speculation increased that the RBNZ, which raised interest rates by a record 75 basis points in November, might choose a lesser increase in February.
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After the Bank of Canada announced on Wednesday that it will likely suspend rate hikes for the time being, investors were optimistic that the US Fed would soon ease off on its aggressive tightening course.
Meanwhile, according to data released this week, Hong Kong’s business climate improved in Q1 of 2023, and the city’s unemployment rate dropped to its lowest level in three years in the three months that ended in December. Holiday travel and box office numbers in China showed hints of improvement as people took advantage of Beijing’s decision to abolish its zero-COVID policy, adding to the optimistic mood.