Japan Stock Selloff Ends Global Uptrend and Yen Increases – Asia Market Wrap

Japanese stocks fell by the most since 2020, with the Yen rising as traders braced for more interest rate hikes from the BoJ. Oil prices rose for a second day on Middle East tensions.

Japan’s equity losses contrasted with gains in Taiwan and South Korea after the Fed indicated on Wednesday that it is close to reducing interest rates in September. US index futures gained, adding to Wall Street gains, after Meta announced higher-than-expected sales after the close.

The contrasting fortunes mirrored traders’ expectations that US-Japan interest rate differentials would reduce following Wednesday’s two central bank announcements. After rising interest rates. Kazuo Ueda, Governor of the BoJ, stated that if its pricing expectations are reached, further rises will follow. Japan’s Topix index fell over 4% before trimming losses, as the Yen reached 148.51 against the Dollar, its highest level since March. The currency has risen about 8% in the last month.

Investors will now prepare for the third major central bank meeting in two days. The BoE is set to drop interest rates by 25 basis points at its policy review, according to projections, marking the first cut since the pandemic began.