Asian Stock Market Showed Gains As Bank of Japan Increases Benchmark Rate

In today’s trading, Asian stocks showed gains following the Bank of Japan’s decision to increase its benchmark interest rate. Meanwhile, the Federal Reserve will announce its policy decisions later today, and the Bank of England will announce them on Thursday.

It’s a good day today for Nikkei 225 as it recovers from earlier losses, closing 1.5% higher at 39,101.82 after BoJ raised its benchmark rate to 0.25% from 0.1%. Although the rate hike was anticipated to strengthen the yen, the impact on the dollar was mixed. The yen saw fluctuations, with the dollar trading above 153 yen at times before falling to 151.60 yen in the late afternoon. 

Currently, Japan’s economy is facing challenges such as slow inflation and moderate economic growth, which have influenced the BoJ’s long-standing ultra-loose monetary policy. The proposed rate hike would mark a significant shift from this policy, reflecting the central bank’s cautious optimism about economic recovery and its efforts to curb any potential overheating of the economy. 

This decision is part of a broader strategy by the BoJ to manage inflation and support sustainable economic growth. The bank has been closely monitoring global economic trends and domestic factors, including consumer spending and corporate investment, to make informed policy adjustments. 

The Hang Seng index, also gained 2.2%, closing at 17,380.46, while the Shanghai Composite index rose 2.1% to 2,938.75. This uptick followed official data indicating that China’s manufacturing activity contracted for the third consecutive month in July, increasing speculation that Beijing may need to implement additional stimulus measures to address the economic slowdown. 

In South Korea, the Kospi climbed 0.9% to 2,761.72, following Samsung Electronics’ announcement of a 15-fold increase in its operating profit for the last quarter.

Meanwhile, Australia’s S&P/ASX 200 gained 1.6%, reaching 8,080.30, after data revealed that the annual inflation rate rose to 3.8% from 3.6% at the beginning of the year, with the consumer price index increasing by 1% compared to the previous quarter.