Nikkei Hits Record High After BOJ Hike as China Stocks Lag
Asian stock markets delivered a mixed performance on Tuesday as Japanese equities climbed to record highs following the Bank of Japan’s widely expected interest-rate increase.
Australian shares remained nearly unchanged after the Reserve Bank of Australia kept rates steady. Meanwhile, South Korean stocks outperformed as technology and semiconductor companies extended their rally.
Chinese and Hong Kong markets lagged after economic data highlighted continued weakness in mainland domestic demand.
Wall Street Rally Supports Asian Markets
Asian equities received a positive lead from Wall Street, where major indexes posted strong gains on Monday.
Investor sentiment improved following progress toward a U.S.-Iran peace agreement. SpaceX shares also extended their rally after the company’s strong stock market debut on Friday.
However, U.S. S&P 500 futures slipped 0.1% during Asian trading. Investors remained cautious ahead of the Federal Reserve’s upcoming policy meeting.
Nikkei Surpasses 70,000 After BOJ Decision
Japan’s Nikkei 225 gained 0.5% after recovering from early losses. The index climbed above 70,000 points for the first time, setting a new record high.
In contrast, the broader TOPIX index declined 0.3%.
The Bank of Japan raised its benchmark interest rate by 25 basis points to 1%, matching market expectations. The central bank also confirmed plans to continue reducing its asset purchases until April 2027.
BOJ Maintains Hawkish Monetary Policy Outlook
The Bank of Japan indicated that additional rate increases remain possible if inflation and economic activity develop as expected.
This message gave the policy announcement a hawkish tone, even though the rate increase had already been widely anticipated.
Higher oil prices remain an important concern for Japanese policymakers because they could increase import costs and strengthen inflationary pressures.
AI and Chip Stocks Drive Japan’s Rally
Technology and semiconductor companies provided the strongest support for the Nikkei.
Artificial intelligence and chipmaking stocks continued to advance after recording strong gains during the previous session.
Investor interest in AI-related companies remains elevated, helping Japanese technology shares outperform other areas of the market.
Australian Stocks Flat After RBA Holds Rates
Australia’s S&P/ASX 200 recovered from early losses and traded close to unchanged after the Reserve Bank of Australia maintained its cash rate at 4.35%.
The decision matched market expectations and followed three rate increases totalling 75 basis points earlier this year.
The RBA said it remains prepared to raise interest rates again if inflation fails to ease. Persistent price pressures and uncertainty surrounding energy costs kept the central bank’s policy outlook relatively hawkish.
South Korean Technology Stocks Lead Asia
South Korea’s KOSPI was the strongest-performing major index in Asia, rising approximately 1.8%.
Technology and semiconductor shares led the advance after their U.S. counterparts recorded substantial overnight gains.
The continued strength of chip stocks helped South Korea outperform most other regional markets.
Weak Economic Data Weighs on Chinese Markets
China’s CSI 300 and Shanghai Composite indexes traded close to unchanged following a mostly disappointing set of economic figures for May.
Retail sales and fixed asset investment both declined more than expected. Fixed asset investment recorded its weakest performance since the COVID-19 crisis.
Industrial production offered one positive signal. Factory output increased slightly more than forecast, supported by strong demand from overseas customers.
However, the broader figures showed that China’s economy continues to struggle with weak consumer spending and subdued domestic investment.
Hang Seng Falls as Technology Shares Slide
Hong Kong’s Hang Seng index was the weakest major market in Asia, falling more than 1%.
Internet and technology companies led the decline as investors reacted to China’s weak domestic economic data.
Concerns about slowing consumption and continued uncertainty surrounding the mainland economy placed additional pressure on sentiment.
Investors Await U.S.-Iran Deal Signing
Other Asian markets recorded modest gains after rising strongly during the previous session.
Investors are now focused on the planned signing of the U.S.-Iran peace agreement on Friday. Markets are also monitoring the expected reopening of the Strait of Hormuz and its potential impact on global energy supplies.
Singapore’s Straits Times index gained 0.5%. India’s Nifty 50 also advanced 0.5% after climbing nearly 2% in the previous session.
