BANGKOK– Stocks in Asia were mixed on Tuesday after the Bank of Japan raised its benchmark interest rate for the first time in 17 years, ending a long-standing negative interest rate policy that contradicted the views of most central banks.
In a widely expected move, the BOJ increased its overnight call rate from minus 0.1% to a range of 0 to 0.1%.
The report said wage increases and other indicators suggested inflation had stabilized above the BOJ’s 2% target, but noted “extremely high uncertainties”, including weakness in industrial production, exports, residential investment and government expenditure.
The market reaction was muted.
Tokyo’s Nikkei 225 index rose 0.7% to 40,003.60, while the dollar rose to 150.35 Japanese yen from 149.14 yen.
The Chinese markets fell. Hong Kong’s Hang Seng index lost 1.2% to 16,526.98, while the Shanghai Composite index fell 0.7% to 3,064.56.
In Seoul, the Kospi fell 1.1% to 2,656.17.
The Australian S&P/ASX 200 added 0.4% to 7,703.20 after the Australian central bank kept its benchmark interest rate steady at 4.35% for the third time in a row. The widely expected decision reflected the fact that inflation is cooling but still above the Reserve Bank of Australia’s target.
US stocks rose on Monday, ahead of a busy week for central banks around the world.
The highlight of the week for Wall Street will likely be the Federal Reserve’s interest rate meeting, which ends Wednesday. Widespread expectations are that the central bank will keep its key interest rate steady at the highest level since 2001.
But Fed officials will also provide updated forecasts on where they see rates going this year and over the long term. They had previously planned three interest rate cuts this year, which would ease pressure on the economy and the financial system.
However, recent reports on inflation have consistently come out worse than expected. That could force the Fed to limit the number of rate cuts it expects to make this year.
Such a move would be a major disappointment for investors.
On the other side of the Atlantic, the Bank of England will announce its latest interest rate decision later this week.
The S&The P500 rose 0.6% to 5,149.42 on Monday, following its first consecutive weekly losses since October.
The Dow Jones Industrial Average rose 0.2% to 38,790.43, and the Nasdaq composite gained 0.8% to 16,103.45. Smaller stocks in the Russell 2000 index fell 0.7%.
On Wall Street, Nvidia rose 0.7% after taking an earlier, bigger gain at the start of its annual developer conference.
A frenzy over artificial intelligence technology on Wall Street has sent shares of Nvidia and other players soaring that critics are calling it a bubble. Nvidia has become the third largest stock in the US stock market.
Other Big Tech stocks also pushed the S&Up P500 to snap a three-day losing streak, the longest in more than two months. Alphabet rose 4.6% and Tesla rose 6.3% to pare its year-to-date loss.
On the losing side was Hertz Global Holdings, which fell 6.2% to take its year-to-date loss to 31.6%. Its chairman and CEO, Stephen Scherr, will step down at the end of March. The company named Wayne “Gil” West as CEO. He is a former director at Cruise, the self-driving car company, and at Delta Air Lines.
Boeing fell another 1.5%, bringing its loss for the year to 31%. It has been grappling with concerns about production quality and the latest negative headline came on Friday. Workers discovered a panel was missing on an older Boeing 737-800 after it arrived at its destination in southern Oregon from San Francisco.
In other trading early Tuesday, U.S. benchmark crude lost 21 cents to $81.95 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 23 cents to $86.55 a barrel.
The euro fell from $1.0872 to $1.0869.
