Asian indices: negative impact of the meetings
After the results of the Fed meeting held on Wednesday, investors’ attention was focused on the Bank of Japan decision on Thursday, as it would define the future position on region’s monetary policy. Fed left rates on hold, but negative interest rates policy, which was introduced in January of current year, was expected from the Bank of Japan.
However, following the results of the Thursday morning trades, it is founded out that the interest rates are still on the same level and the further introduction of negative interest rates is not expected. The economic data statistics is quite plural: household spending fell by 5.3% per annum in March, thought the expected decrease was by 4.2%. Meanwhile, the Japanese core consumer price index fell by 0.3% per annum in March, lower than the forecasted 0.2% level, and the unemployment rate decreased up to 3.2%, thought the 3.3% level was expected.
Thus, the industrial production in Japan increased by 3.6% per month in March instead of the expected growth by 2.9%, and Retail sales declined by 1.1% per annum, contrary to the forecasted 1.5% level.
Following the results of trades, Nikkei 225 index decreased by 3,61% (-624,44 points) up to the 16666,05 level, breaking through the key support level of 17000. The national currency favored the index decline: after the interest rate decision release, USD/JPY quote goes up to 108,99 level, losing 2,21%. By Thursday 12:00 the decline reached 3%, the currency is traded at 108,12 level and continues to devalue.
The shares of the biggest Japanese broker companies are slumping in Tokyo, partially because of the Nomura Holdings Inc. losses based on the results of the previous quarter. Nomura market value slumped by 10%, and Daiwa Securities Group Inc. (the results release will be published after trades closing on Thursday) fell by 6.9%.
It appears that the Bank of Japan is still waiting for the US rate increase and for the crude materials price growth. The first factor is needed to weaken the national currency, as the growing demand for the US dollar would influence all reserve currencies including yen and would lead to support of Japanese stock market.
Talking about the crude materials, the reason is quite obvious: the price growth of the commodity and raw material assets will speed up inflation and will respectively make a positive impact on the country’s economy.
The gradual correction on Japanese market can be expected next week, when the negative impact of the Bank of Japan decision is systematically neutralized. Investors will pay great attention to the stock market potential growth factors, including oil prices and the US dollar index, which might consolidate soon.
Nikkei 225 is expected to return back to the price range with 17000 lowest level, though the active growth, which happened the previous week, is not possible now.
The local support will be processed within the 16350 level – the strong level of the previous week. The resistance is on the 16850, 17000 и17250 levels. If being overcome, buying up to 17000, 17200 и 17350 levels respectively is possible. The forecast is moderately neutral; the crude materials and the US dollar prices are in focus.
In comparison, the Chinese indices couldn’t show a positive outcome either: the Shanghai Composite index decreased by 0.28% up to the 2945,38 level by the end of trades and even tested lower levels during section. The key decrease factor is the drop in prices of raw material producers, including the manipulation with coal futures. The stock market was supported during the last hours of trades after the National Bank of China decreased the yuan reference rate from 6,4837 to 6,4954.
Nikkei 225/Hang Seng/Kospi, H1
Hong Kong Hang Seng index also fell down following the results of trades, it lost 0,07% and reached the 21347 level. The index followed the dynamic of continental indices and dropped after the commodity producers’ shares decreased, which were traded in Hong Kong.
South Korea's KOSPI is not an exclusion, it lost 0.72% by the end of section, but though it is still higher than key support level of 2000,93.
We notice temporary decline in all sectors, which may stop during Friday’s trade session. The common forecast is moderately neutral.