(Sharecast News) - Asia-Pacific markets traded mixed on Wednesday as investors assessed Wall Street's sharp losses in technology stocks and the Bank of Japan's policy decision.
Policymakers in Tokyo kept interest rates unchanged, in a decision that was widely expected as they weighed the potential impact of US president Donald Trump's sweeping tariff policy.
"Asian stocks advanced for a fourth straight session, diverging from the ongoing selloff in US markets, while gold surged to a record high," noted TickMill market strategy partner Patrick Munnelly.
"Japanese and South Korean equities posted gains, though Chinese markets delivered mixed results.
"Meanwhile, Bank of America's latest survey revealed that investors have slashed their US equity exposure to record lows, while cash reserves have risen sharply."
Munnelly said fears of a potential recession were being stoked by concerns over president Trump's economic policies, particularly regarding trade and tariffs.
"Market participants are now anxiously awaiting the Federal Reserve's policy announcement later on Wednesday for clearer guidance.
"In the meantime, investors continue to explore alternative opportunities, with Chinese and Japanese benchmarks recently enjoying notable rallies.
"The yen weakened against the dollar after earlier volatility, as the Bank of Japan maintained its policy stance."
Markets mixed as investors watch central banks, Wall Street slide
In Japan, the Nikkei 225 slipped 0.25% to 37,751.88, weighed down by steep declines in Fujikura, Advantest, and Mercari.
However, the broader Topix gained 0.45% to 2,795.96 after the Bank of Japan left interest rates unchanged.
China's mainland markets saw modest declines, with the Shanghai Composite edging down 0.1% to 3,426.43 and the Shenzhen Component slipping 0.32% to 10,979.05.
Semiconductor-related stocks led losses, as Shengyi Technology and Shenzhen Kinwong Electronic both dropped close to their daily limits.
Hong Kong's Hang Seng Index managed a 0.12% gain to 24,771.14, supported by strong performances in consumer stocks.
Budweiser Brewing Company surged 6.45%, while Hansoh Pharmaceutical Group and China Resources Beer also posted solid gains.
South Korea's Kospi 100 outperformed the region with a 0.91% rise to 2,640.25.
Orion Corporation and Hanwha Solutions both advanced more than 4%, contributing to the index's strength.
In Australia, the S&P/ASX 200 fell 0.41% to 7,828.30, dragged lower by losses in Pinnacle Investment Management, Nickel Industries, and James Hardie Industries.
New Zealand's S&P/NZX 50 also declined, shedding 0.26% to 12,045.93.
Sanford, Eroad, and Ryman Healthcare all closed lower in Wellington.
In currency markets, the dollar was last 0.33% stronger on the yen, trading at JPY 149.76, as it advanced 0.51% against the Aussie to AUD 1.5800, and rose 0.54% on the Kiwi, changing hands at NZD 1.7276.
Oil prices declined, as Brent crude futures fell 0.79% on ICE to $70.00 per barrel, while the NYMEX quote for West Texas Intermediate lost 0.93% to settle at $66.28.
Meanwhile, gold prices reached a fresh record high as investors sought safe-haven assets amid market uncertainty.
Bank of Japan maintains interest rates, as expected
At the top of the economic agenda was the Bank of Japan, which left its key policy rate unchanged at 0.5%, maintaining its stance as it assessed the potential impact of US president Donald Trump's trade policies on Japan's export-driven economy.
The decision, which was widely expected, followed the central bank's January rate hike from 0.25% - its first increase in over a decade after ending years of ultra-loose monetary policy.
Governor Kazuo Ueda signalled that further rate hikes remained on the table if economic conditions evolved as anticipated.
Speaking at a press conference, Ueda said the central bank would adjust monetary policy as necessary, noting that Japan's real interest rates remained low.
He also emphasised that the Bank of Japan is closely monitoring wage growth, inflation trends, and broader economic conditions in determining future policy moves.
Recent wage hikes at both large and small firms suggested earnings growth was becoming more widespread, he said.
Market analysts viewed the BoJ as being in a tightening phase that could extend beyond 2025.
Japanese government bond yields edged higher following the policy decision, with the 10-year yield rising to 1.519% and the 20-year ticking up to 2.605%.
MFS Investment Management attributed the increases to expectations of further policy adjustments, noting that rising local yields could influence domestic investment behaviour and reduce the incentive for Japanese investors to seek higher returns abroad.
"The central bank observed that a positive cycle of wages and prices is strengthening, while remaining vigilant about global trade dynamics," TickMill's Patrick Munnelly said.
"The governor highlighted that multiple factors influence the central bank's policy interest rate, extending beyond simply subtracting inflation from current policy or market rates."
Munnelly said that among those factors, financial market conditions played a "significant role".
"Recent studies by economists and investment banks have explored the potential effects of terminal rates set at 1.5% or 2%.
"Findings largely suggest that Japanese interest rates and the yen could rise substantially.
"Following the anticipated 25 basis point hike in May, June, or July; yen watchers project the USD-JPY exchange rate could climb to JPY 146."
In trade data, Japan posted a surplus of JPY 584.5bn in February, reversing the previous month's deficit.
Exports rose 11.4% year-on-year, marking a fifth consecutive month of growth, though falling short of economists' 12.1% forecast.
Imports declined 0.7%, missing expectations for a slight increase and contrasting sharply with the 16.7% growth recorded in January.
Reporting by Josh White for Sharecast.com.
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