Asia Stocks Mixed as BOJ Policy Shift Reverberates: Markets Wrap

(Bloomberg) -- Equities in Asia were mixed Wednesday as investors approach the end of one of the worst years for stocks and bonds in more than a decade. The yen held gains while Japan's two-year government yield rose above zero for the first time since 2015.Australian shares and Hong Kong equity futures advanced. Japanese shares fell, as did a gauge of US-listed Chinese companies.

US share futures climbed after the S&P 500 rose. The tech-heavy Nasdaq 100 fell slightly as markets continued to digest last week's hawkish commentary from the Federal Reserve and European Central Bank.The yen steadied after its biggest one-day jump since 1998 on Tuesday to climb almost 4% against the dollar. The action followed a surprise decision by the BOJ to let yields on 10-year government bonds trade up to 0.5%, from a previous ceiling of 0.25%.

Japanese bank stocks rose, bucking the broader trend in the nation's equities, on expectations that rising interest rates will boost their profitability.The impact of the move continues to reverberate and has traders on guard for the prospect of Japanese institutions repatriating money held in overseas stocks and bonds. Japanese investors have more than $3 trillion in foreign equities and debt with roughly half in the US, according to Bloomberg data. Benchmark 10-year Treasury yields inched higher in Asia after jumping 10 basis points for the second consecutive session on Tuesday. 'Tighter BOJ policy would remove one of the last global anchors that's helped to keep borrowing costs at low levels more broadly,' Deutsche Bank analysts told clients, noting the change has come as markets were 'already reeling' from the Fed and ECB meetings last week.Many economists now expect the BOJ to raise interest rates next year, joining the Fed, the ECB and others after a decade of extraordinary stimulus. Fresh data indicating a cool down in the US housing market offered some respite to the outlook for inflation in a year marked by quickly rising interest rates that weighed on stocks and bonds. Global equities have fallen by a fifth in 2022, on pace for their worst year since 2008.

A Bloomberg index of global bonds has tumbled by 16%, by far the largest decline on an annual basis since the benchmark began in 1990.US GDP, initial jobless claims, US Conf. Board leading index, ThursdayUS consumer income, new home sales, US durable goods, PCE deflator, University of Michigan consumer sentiment, FridaySome of the main moves in markets:S&P 500 futures rose 0.3% as of 9:52 a.m. Tokyo time.

The S&P 500 rose 0.1%Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 0.1%Hang Seng futures rose 0.1%Japan's Topix fell 0.7%Australia's S&P/ASX 200 rose 1.4%Euro Stoxx 50 futures rose 0.4%The Bloomberg Dollar Spot Index was little changedThe euro was little changed at $1.0622The Japanese yen was little changed at 131.74 per dollarThe offshore yuan was little changed at 6.9656 per dollarBitcoin fell 0.3% to $16,830.18Ether fell 0.7% to $1,207.95The yield on 10-year Treasuries advanced two basis points to 3.70%Australia's 10-year yield was unchanged at 3.73%West Texas Intermediate crude was little changedSpot gold was little changedThis story was produced with the assistance of Bloomberg Automation.(An earlier version of this story was corrected to fix the spelling of Hong Kong in the second paragraph)More stories like this are available on bloomberg.com