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Nikkei 225 falls more than 2% after Bank of Japan widens yield target range, yen strengthens

This is CNBC's live blog covering Asia-Pacific markets.

A cyclist travels past the Bank of Japan (BOJ) headquarters in Tokyo, Japan. Photographer: Noriko Hayashi/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images

Markets in the Asia-Pacific fell as the Bank of Japan modified its yield curve control tolerance range while holding its ultra-low benchmark interest rates steady.

The Nikkei 225 fell 2.46% to 26,568.03, leading losses in the region, and the Topix fell 1.54% to 1,905.59. The Japanese yen strengthened by more than 3% against the U.S. dollar to 132.56, marking its strongest levels in over three months.

In South Korea, the Kospi fell 0.8% to 2,333.29 and the S&P/ASX 200 in Australia also traded 1.54% lower to close at 7,024.3.


Hong Kong's Hang Seng index fell 1.3% in its final hour of trade, with technology and property stocks dragging down the wider index. In mainland China, the Shenzhen Component fell 1.58% to 10,949.12 and the Shanghai Composite fell 1.07% to 3,073.77 as the People's Bank of China kept its key lending rates steady.

Overnight in the U.S., stocks on Wall Street fell, marking the fourth consecutive day of losses for all three averages as concerns over an upcoming recession trumped optimism for a year-end rally.

Japanese central bank governor says bank will not hesitate to ease monetary policy further

Bank of Japan Governor Haruhiko Kuroda said the central bank will not hesitate to further ease its monetary policy if it's necessary as the economy faces many uncertainties, he said in a press briefing.

He added that it's too early to debate an exit from the current policy, and that strategies for an exit should be discussed at policy meetings if the economy nears the central bank's inflation target of 2%.

– Jihye Lee

Bank of Japan announces unscheduled bond buying operations

The Bank of Japan offered to purchase 600 billion yen in Japanese government bonds with a maturity range of one to three years.

The central bank earlier said it would increase its outright purchases of JGBs to around 9 trillion yen per month from January until March – up from the previously planned 7.3 trillion yen.

The 10-year JGB yield rose 20.5 basis points earlier to 0.455%, marking the highest level it's seen since 2015.

– Jihye Lee

Bank of Japan holds rates steady, widens yield curve control band

The Bank of Japan held its benchmark interest rates steady and announced it will modify its yield curve control band, the central bank said in a statement.

The BOJ will expand the range of 10-year Japan government bond yield fluctuations from its current plus and minus 0.25 percentage points to plus and minus 0.5 percentage points, it said.

The adjustment is intended to "improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions," the BOJ said.

The Japanese yen strengthened more than 2% to stand at 133.37 against the U.S. dollar after the announcement.

– Jihye Lee

Reserve Bank of Australia minutes show range of options were considered in December

Minutes from the Reserve Bank of Australia's December meeting showed that the central bank had considered a number of options for its cash rate decision, including a complete pause in hikes.

"The Board considered several options for the cash rate decision at the December meeting: a 50 basis point increase; a 25 basis point increase; or no change in the cash rate," the minutes said.

RBA board members also noted the importance of "acting consistently," adding that the central bank will continue to consider a range of options for the upcoming year as well.

– Jihye Lee

China keeps key lending rates unchanged

The People's Bank of China kept its one-year and five-year loan prime rates unchanged in December, according to an announcement.

The central bank maintained its one-year loan prime rate at 3.65% and its five-year loan prime rate at 4.30%, in line with expectations in a Reuters poll.

The offshore and onshore Chinese yuan were relatively flat at 6.9808 and 6.9783 against the U.S. dollar, respectively.

– Jihye Lee

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— Zavier Ong

Bank of Japan expected to hold rates steady

The Bank of Japan is expected to keep its interest rates steady at -0.10%, according to survey of economists by Reuters.

The rate decision is expected after the central bank's two-day monetary policy concludes Tuesday.

Separately, Japan's government and the BOJ are reportedly aiming revise a statement committing to a 2% inflation target at the earliest possible date, according to Kyodo News, citing government sources.

Jihye Lee

The Fed is overdoing rate hikes, Evercore ISI says

The Federal Reserve is likely overdoing it's rate hikes to tame inflation and could end up tipping the U.S. economy into a recession, Ed Hyman of Evercore ISI wrote in a Sunday note.

The Federal Funds rate is now 6.5% versus a core PCE of 4.7% on the year and bond yields at 3.5%, Hyman wrote.

"And it's not just the Fed tightening: ECB, BoE, Mexico, Switzerland, and Norway also tightened last week," he said. "Perhaps more profoundly, the money supply is contracting."

In addition, Evercore's economic diffusion index is approaching recession territory along with other indicators such as company surveys, inflation data and layoff announcements. And, wage gains have started to slow and high rents are showing early signs of easing, signaling that inflation has likely run its course.

"In any event, 87 percent of American voters are concerned about a recession," said Hyman.

—Carmen Reinicke

S&P 500 headed for worst December in four years

The S&P 500 has dropped more than 6% this month, as Wall Street struggles heading into year-end. That puts in on track for its worst monthly performance since September. It would also be its biggest December decline since 2018, when it slid 9.18%.

— Fred Imbert

Stocks close lower for fourth day in a row

Recession fears and dashed hopes of a year-end rally weighed on stocks Monday, sending them to the fourth consecutive negative close.

The Dow Jones Industrial Average shed 163.85 points, or 0.50%, to close at 32,756.61. The S&P 500 fell 0.91% to 3,817.47, and the Nasdaq Composite shed 1.49%to 10,546.03 weighed down by shares of Amazon, which slipped 3%.

—Carmen Reinicke