Asian stocks dip as Japan sees profit-taking; Alibaba fuels HK tech rally

Investing.com-- Most Asian stocks retreated on Wednesday as mixed signals from the Bank of Japan spurred some profit-taking in Japanese markets, while Hong Kong stocks rebounded sharply on a tech-fueled rally led by Alibaba Group.

A rout in Chinese stocks appeared to have resumed, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes falling 0.7% and 0.4%, respectively. The two indexes had recovered marginally from five and four-year lows on Tuesday following a report that the Chinese government was planning a 2 trillion yuan ($278 billion) support package for local stocks.

But sentiment towards China remained weak amid persistent concerns over a slowing post-COVID economic rebound.

Broader Asian markets were skittish as traders remained on edge over higher-for-longer U.S. interest rates, especially ahead of key economic readings and major tech earnings due later this week. But a series of record-high finishes on Wall Street limited any major losses.

Australia’s ASX 200 was flat, tracking a muted performance in oil and gas giant Woodside Energy Ltd (ASX:WDS) after the firm clocked a smaller-than-expected revenue increase in the December quarter.

Broader Australian stocks also saw some profit-taking, with the ASX remaining within sight of a record high.

South Korea’s KOSPI fell 0.3%, while futures for India’s Nifty 50 index pointed to a muted open, after Indian stocks were hit with a heavy degree of profit-taking in recent sessions.

Japanese stocks fall amid profit-taking, mixed BOJ signals

Japan’s Nikkei 225 and TOPIX indexes fell 0.7% and 0.5%, respectively, leading losses in Asia as investors locked-in profits from the two recently touching 34-year highs.

Sentiment towards Japan was also muddled by mixed signals from the BOJ. While the central bank largely maintained its ultra-dovish stance at the conclusion of a two-day meeting on Tuesday, governor Kazuo Ueda signaled more progress towards an eventual end to negative interest rates in Japan.

Ueda said that the BOJ will still maintain easy policy even after pulling rates from record lows. But any changes to the central bank’s stance signal an end to the ultra-loose conditions enjoyed by Japanese markets for nearly a decade.

A dovish BOJ was a key driver of Japan’s recent stock rally, with the Nikkei clocking an over 30% gain in 2023.

Hong Kong rebounds as Alibaba spurs tech rally

Hong Kong’s Hang Seng index was an outlier for the day, rising 1.3% on gains in heavyweight technology stocks. Alibaba Group (HK:9988) (NYSE:BABA) led the charge, rallying 5% after reports said co-founders Jack Ma and Joe Tsai had bought a collective $200 million worth of shares in the e-commerce major through the fourth quarter.

The report saw Alibaba’s HK shares rebound from a 15-month, and also helped inspire gains in broader tech stocks in the Hang Seng.

Peers Baidu Inc (HK:9888) (NASDAQ:BIDU) and Tencent Holdings Ltd (HK:0700), which along with Alibaba make up China's BAT trio, rose 4.9% and 1.4%, respectively.

Still, the Hang Seng was trading close to 15-month lows, as sentiment towards China- which is a key driver of the Hong Kong market, remained weak.

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