Most Asian stock markets fell even more on Wednesday as investors tried to figure out what a sudden policy change by the Bank of Japan meant. The Nikkei index fell to a level that hasn’t been seen in more than two months.
The Nikkei 225 had the worst performance in Asia for the second day in a row, falling 0.7% after falling 2.5% the day before. The BOJ increased the range in which the yields on the benchmark government bonds can change. This could be a sign that the central bank’s ultra-dovish policy is about to change.
A situation like this would be bad for the Japanese stock market, which has been doing well for almost a decade.
Asian markets were already shaken up by a series of hawkish signals from other major central banks, and the possibility of the BOJ turning more hawkish didn’t help. Last week, the Federal Reserve, the European Central Bank, and the Bank of England all said that interest rates will continue to rise in 2023.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both went down by 0.1% and 0.3%, respectively, as the number of COVID-19 cases in the country continued to rise. Analysts think that the recent loosening of restrictions on COVID will help the economy recover in the long run, but they warn of short-term volatility in Chinese markets as the country deals with more infections.
Related: Asian stocks fall as the BOJ makes a surprise policy change that makes the yen go up.
Fears that hawkish central banks could cause a recession in 2023 and uncertainty about China have made it less likely that Asian stocks will go up at the end of the year. This year, rising interest rates hurt regional markets, and most bourses are trading down for 2022.
Both the Nifty 50 and the BSE Sensex 30 fell by about 0.1% in India. But they are among the few Asian stock markets that are up for the year. Both are up more than 6% because the Indian economy is doing well. With a GDP of nearly 7%, the country is expected to have one of the fastest-growing economies in 2022.
On Wednesday, some Asian stock markets bounced back from big losses. The Taiwan weighted index rose 0.5%, while Philippine stocks rose 0.7%, leading Southeast Asia.
The ASX 200 index in Australia went up 1.3% after hitting a one-month low the day before.