Asian Markets Mixed As Recession Woes Persist

Asian shares ended mixed on Wednesday as recession worries persisted, and China continued to grapple with a surge in the number of new Covid-19 cases.

The Japanese yen weakened slightly after having jumped to a four-month high versus the dollar on Tuesday following a surprise Bank of Japan policy tweak.

Gold dipped from a one-week high hit in the previous session, while oil edged up slightly as a drawdown in U.S. crude stocks countered China Covid concerns.

China’s Shanghai Composite Index slipped 0.2 percent to 3,068.41 after a range-bound session. Hong Kong’s Hang Seng Index edged up 0.3 percent to settle at 19,160.49.

Japanese shares extended losses for a fifth straight session following the BoJ’s unexpected hawkish pivot. The Nikkei 225 Index dropped 0.7 percent to 26,387.72, while the broader Topix closed 0.6 percent lower at 1,893.32. Automakers Toyota, Honda Motor and Nissan lost 2-3 percent.

Banks extended gains from the previous session on expectations that they would benefit from the BoJ policy tweak. Mitsubishi UFJ Financial and Sumitomo Mitsui Financial Group both surged around 4 percent.

Seoul stocks ended modestly lower, with the Kospi average finishing down 0.2 percent at 2,328.95.

Australian markets bounced back from four days of losses, led by miners and energy stocks. The benchmark S&P/ASX 200 Index rallied 1.3 percent to 7,115.10 points, after losing 2.5 percent over the previous four sessions. The broader All Ordinaries Index ended 1.3 percent higher at 7,293.

A decent sprinkling of regional economic data and a monetary policy decision in Indonesia should give Asian markets direction on Thursday, with the tone likely to be upbeat following the strong performance of U.S. and world equities on Wednesday.

The MSCI Asia ex-Japan index rose on Wednesday for the first day in five, snapping its longest losing streak since October. It should have a much more stellar start on Thursday after the MSCI World and three main Wall Street indexes all chalked up their biggest gains this month.

On the data front South Korean producer price inflation, Thai trade balance and Taiwanese unemployment and industrial production figures are all scheduled for release.

Bank Indonesia is expected to follow the U.S. Fed’s example and slow the pace of interest rate hikes while stressing that the battle against inflation is far from over.

Economists polled by Reuters expect a quarter-point increase following three consecutive half-point hikes. Indonesia’s central bank governor Perry Warjiyo said on Tuesday that he expects December inflation at 5.4%, but easing next year to around 3%.

Three key developments that could provide more direction to markets on Thursday are Indonesia interest rate decision (+25 bps forecast), South Korea PPI inflation (November) and Thailand trade (November).

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