Yen weakens after Bank of Japan holds rates; Asian markets sink on hawkish Fed

Abigail Ng

Asia markets traded lower on Thursday after the U.S. Federal Reserve raised interest rates and signaled further hikes ahead. U.S. stocks were volatile and closed sharply lower following the announcement.

In Hong Kong, the Hang Seng index fell 1.56% in early trade, with the Hang Seng Tech index dropping 1.69%. The Shanghai Composite in mainland China shed 0.16% and the Shenzhen Component rose after dropping earlier.

The Nikkei 225 in Japan slipped 0.88%, and the Topix index fell 0.58%.

Japan’s central bank kept interest rates unchanged, in line with expectations.

South Korea’s Kospi dropped 1.47% and the Kosdaq lost 2.1%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3%.

Australia’s market was closed for a holiday.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	27047.37	-265.76	-0.97
.HSI	Hang Seng Index	*HSI	18151.12	-293.5	-1.59
.AXJO	S&P/ASX 200	*ASX 200	6700.2	-106.2	-1.56
.SSEC	Shanghai	*SHANGHAI	3114.4	-2.78	-0.09
.KS11	KOSPI Index	*KOSPI	2323.92	-23.29	-0.99
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	7294.14	-103.32	-1.4

The U.S. Federal Reserve is expected to continue hiking interest rates to as high as 4.6% in 2023, according to its median forecast.

— CNBC’s Jeff Cox, Samantha Subin, Carmen Reinicke and Yun Li contributed to this report.

Bank of Japan holds steady, stands by yield curve control policy – yen weakens past 145

The Bank of Japan kept its interest rates on hold, according to an announcement posted on its website – meeting expectations forecasted by economists in a Reuters poll.

The Japanese yen weakened to 145 against the greenback shortly after the decision.

“Japan’s economy has picked up as the resumption of economic activity has progressed while public health has been protected from Covid-19, despite being affected by factors such as a rise in commodity prices,” the central bank said in the statement.

–Jihye Lee

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Asian currencies weaken after Fed’s third-straight big hike

Currencies in the Asia-Pacific weakened further after the U.S. Federal Reserve delivered its third consecutive rate hike of 75 basis points.

China’s onshore yuan weakened past 7.09 per dollar, hovering near levels not seen since June 2020.

The Japanese yen weakened to 144.51, while the Korean won also surged past 1,409 against the greenback – the weakest since March 2009. Australia’s dollar fell to $0.6589.

–Jihye Lee

U.S. 2-year Treasury yield inches toward 2007 highs

The 2-year Treasury yield inched as high as 4.132% in Asia’s morning trade after the Fed hiked rates by 75 basis points, close to the October 2007 high of 4.138%.

The benchmark 10-year Treasury yield stood at 3.5514% after hitting 3.64% overnight in the U.S.

— Abigail Ng

British pound slides further to hover around 37-year low

The British pound fell further in Asia’s morning trade, hitting $1.1217 — its lowest level since 1985. The currency has been losing ground against the U.S. dollar this year as economic concerns rise.

Analysts are split over whether the U.K. central bank will hike rates by 50 basis points or 75 basis points later today. Sterling last traded at $1.1223.

— Abigail Ng

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Bank of Japan likely to maintain yield curve control for rest of 2022: DBS

Substantial adjustments to the Bank of Japan’s policies are likely to happen only after the central bank’s leadership changes in mid-2023, DBS Group Research said in a note Tuesday.

But the BOJ may consider some “policy finetuning,” such as widening the target band by 10 basis points, in response to market pressures, analysts wrote.

It added that “regardless of intervention,” the dollar-yen could test 147.66 last seen in August 1998, adding they are not ruling out USD/JPY pushing above 150 “without a hard landing in the U.S. prompting Fed cuts.”

— Abigail Ng

Stock futures open lower

U.S. stock futures fell on Wednesday night following a volatile session in the major averages as traders weighed another large rate hike from the Federal Reserve.

Dow Jones Industrial Average futures declined by 16 points, or 0.05%. S&P 500 and Nasdaq 100 futures dipped 0.19% and 0.31%, respectively.

— Sarah Min

Stocks slide, Dow closes 522 points lower in volatile trading session

Stocks wavered on Wednesday but finished the session deep in the red after the Federal Reserve announced another 75 basis point rate hike.

The Dow Jones Industrial Average shed 522.45 points, or 1.7%, to close at 30,183.78. The S&P 500 slid 1.71% to 3,789.93 and the Nasdaq Composite dove 1.79% to 11,220.19.

— Samantha Subin

Source : CNBC