Asian stocks dip amid China trade jitters, Japan rises as BOJ underwhelms

Investing.com-- Most Asian stocks fell on Friday as a rally on signs of cooling U.S. inflation wound down, while Japanese shares rose after the Bank of Japan surprised markets by signaling no near-term changes to its bond buying program.

Chinese markets were the worst performers for the day, hit by new European Union tariffs against the country’s major electric vehicle makers. Fears of retaliatory measures from Beijing also dampened sentiment. 

Regional markets took middling cues from Wall Street. While gains in technology stocks still saw the S&P 500 and NASDAQ Composite hit record highs for a fourth consecutive session, broader sectors were subdued even as factory inflation data unexpectedly shrank in May. 

U.S. stock index futures were muted in Asian trade. 

Japanese stocks rise as BOJ maintains bond purchases

Japan’s Nikkei 225 and TOPIX indexes rose 0.7% and 0.3%, respectively, after trading sideways for most of the day.

The BOJ kept interest rates steady as widely expected. But the bank surprised markets by enacting no near-term changes to its bond buying program.

Instead, the BOJ said it will meet with market participants and unveil an elaborate plan to begin cutting bond purchases at its next meeting, in end-July.

The move indicated that Japanese monetary policy will remain relatively loose in the near-term- a trend that bodes well for local stock markets.

Markets were doubtful over the BOJ's capacity to tighten policy, given recent signs of weakness in the Japanese economy. The central bank also offered no cues on plans to raise interest rates, after a historic hike in March.

Chinese stocks hit by tariff jitters

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.6% and 0.4%, respectively, while Hong Kong’s Hang Seng index lost 0.6%. 

Chinese bourses saw extended selling after the EU unveiled steep tariffs of between 17% to 30% on the import of Chinese electric vehicles. SAIC Motor Corp Ltd (SS:600104) was the worst hit, facing the steepest trade duties among its peers.

The EU trailed the U.S. in imposing tariffs on China’s fast-growing EV sector. But unlike the U.S., the EU does represent a major market for Chinese EV makers. 

The tariffs ramped up concerns that the EU and the U.S. could impose more restrictions on Chinese imports, while Beijing could also announce retaliatory measures, denting relations between the world’s largest economies. 

Broader Asian stocks drifted lower. Australia’s ASX 200 fell 0.3%, while futures for India’s Nifty 50 index pointed to a flat open after the index notched a series of new peaks this week.

South Korea’s KOSPI was an outlier, rising 0.3% on some sustained strength in technology stocks.