BANGKOK – Asian shares were mixed on Friday after the Bank of Japan adjusted its bond buying policy but kept its negative benchmark interest rate unchanged.
Tokyo and Sydney slipped while Hong Kong and Shanghai advanced. US futures were lower and oil prices fell.
Japan’s central bank opted to keep its benchmark interest rate at minus 0.1% but fine-tuned its bond purchases to allow more flexibility.
The Bank of Japan said extreme uncertainties for the economy and prices required a more agile approach than its previous policy. It said it would offer to buy 10-year Japanese government bonds at 1% each trading day instead of the 0.5% cap imposed under its “yield curve control program”.
It added that the goal is still to keep long-term interest rates close to zero percent.
Japanese markets faltered ahead of Friday’s announcement. Subsequently, Tokyo’s Nikkei 225 fell more than 2% but finally closed down 0.4% at 32,759.23. The dollar edged higher against the Japanese yen but recovered from 139.49 to 139.58.
Shares of Japanese banks soared. Mizuho Financial Group gained 4.8%; Mitsubishi UFG added 5.3% and Sumitomo Mitsui Financial Group added 4.3%.
Australia’s S&P/ASX 200 fell 0.7% to 6,877.93.
The Shanghai Composite index jumped 1.9% to 3,276.03, while the Hang Seng in Hong Kong rose 1.4% to 19,920.46. The Kospi rose 0.2% to 2,608.32 in Seoul.
Markets in India and Thailand remained closed on account of holidays.
Stocks in Europe climbed on Thursday after the European Central Bank raised interest rates and it remained unanswered whether further hikes are on the way. The French CAC 40 jumped 2.1% and Germany’s DAX returned 1.7%.
But the rally failed on Wall Street as the S&P 500 fell 0.6% to 4,537.41 during the morning after hitting its highest level in nearly 16 months. The Dow Jones Industrial Average also pared losses from early gains and fell 0.7% to 35,282.72. The Nasdaq Composite closed down 0.5% at 14,050.11.
Honeywell International was under pressure from the market despite reporting stronger profit than analysts expected. It declined 5.7% after its revenue fell short of analysts’ expectations, as did earnings forecasts for the current quarter.
Wall Street’s decline capped a difficult run where the Dow climbed for 13 consecutive days. It was up to 125 points on Thursday morning and looked like it was on the verge of tying the win-streak record set in 1897 before it ran out of momentum.
Shares are roaring on hopes that the Federal Reserve can do what previously seemed a long-standing bet: successfully tame high inflation by raising interest rates without sending the economy into a painful recession.
But critics say the market’s rapid upward move is too, too fast, and a growing consensus about a “soft landing” for the economy is hardly a certainty.
Reports about the economy were mostly encouraging on Thursday, but pressures on inflation may remain. Strong data on the job market in particular could mean that American households will continue to spend, encouraging companies to raise prices. This could result in pressure on the Federal Reserve to keep interest rates higher than expected, keeping the threat of a recession alive.
One estimate says that the growth of the overall economy has accelerated in the spring. That easily topped forecasts from economists who were expecting a recession in the first three months of the year. That report also suggested that the rate of inflation from April to June was not as high as expected.
Another report said fewer workers applied for unemployment benefits last week. It is the latest sign that the job market remains remarkably solid, while a third report said orders for long-durable manufactured goods strengthened more than expected last month.
The Federal Reserve raised its federal funds rate on Wednesday to its highest level in more than two decades in hopes of taming inflation. Higher rates slow down the entire economy and hurt the prices of stocks and other investments.
In other trading Friday, US benchmark crude fell 21 cents to $79.88 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, it increased by $ 1.31 to $ 80.09 per barrel.
Brent crude, the price base for international trade, fell 26 cents to $83.53 a barrel.
The euro slipped to $1.0979 from $1.0980.