Nikkei 225 and Asian stocks slide on Tuesday after the Bank of Japan adjusted its yield curve control (YCC) program increasing the allowable band for 10-year bond yields to target a band in and around 0.50% from the previous band of 0.25%.
The move ratled markets sending Nikkei 225 index 2.50% lower at 26,568, the Hang Seng index dropped 1.52% and the Shangai stock index dropped 1.10%.
The Japanese Yen soared on the announcement sending the USDJPY pair down 3% at 132.85, while the 10-year JGB yields surged to seen years high at 0.455%.
Bank of Japan hold the interest rates unchanged as expected at -0.10% and kept the short-term interest rate target at -0.1%.
In the press conference following the interest rates announcement Bank of Japan (BOJ) Governor Haruhiko Kuroda said that is necessary to achieve tha 2% inflation target in tandem with wage growth and won’t hesitate to ease monetary policy further if necessary. He added that today’s decision is not a rate hike, and estimated that US inflation has passed its peak.
The People’s Bank of China (PBOC) earlier today kept the benchmark Prime Rates (LPR) unchanged as widely expected by economists.
In other news from Asia-Pacific, the Reserve Bank of Australia today released the policy meeting Minutes showing that RBA considered leaving interest rates unchanged at its next policy meeting.
Nikkei 225 Technical Analysis
Nikkei 225 trading 2.46% lower at 26,567 hitting a fresh two month low. Nikkei 225 index has outperformed its USA and European pears as it down 7.72% since the beginnig of 2022.
The technical picture points for more pain ahead as the major Japanese index breached today below the 200-day simple moving average. Strong support for Nikkei 225 stands at 26,237 the low from October 12, 2022. If the bears continue the pressure the next support estimated at 25,621 the low from October 3, 2022.
On the other hand, now the 200-day moing average strong support has turned into resistance, and bulls need to retake that level to proide relief for the bulls. Next hurdle awaits at 27,565 the 50-day moving average, which if breached w can’t ruled out a move towards 27,690 where the 100-day moing average crosses.
Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently, Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).