Asian stocks fall as US rate cheer fades; Nikkei hit by BOJ jitters

Investing.com-- Most Asian stocks fell on Thursday as Federal Reserve officials offered differing signals on U.S. interest rates, while Japanese shares slid from record highs amid speculation over a Bank of Japan pivot.

Regional bourses largely traded past a positive overnight session on Wall Street, after Fed Chair Jerome Powell said the central bank will cut rates this year. But a little after Powell’s testimony, Minneapolis Fed President Neel Kashkari said in an interview that he saw no more than one or two rate cuts this year, citing concerns over sticky inflation.

Kashkari’s comments saw U.S. stock futures fall between 0.2% and 0.6% in Asian trade, with this weakness also spilling over into Asian indexes. 

Japanese shares tumble from record highs amid BOJ pivot watch 

Japan’s Nikkei 225 reversed early gains and traded 0.9% lower, pulling back from an intraday record high. The broader TOPIX index also fell 0.2%.

Japanese shares were hit by growing speculation that the BOJ was close to ending its negative interest rate regime, potentially as soon as March. Strong wage data for January, released on Thursday, furthered this notion.

Any rate hikes by the BOJ mark the end of the monetary stimulus enjoyed by Japanese markets for nearly a decade. Ultra-loose policy was also a key driver of the Nikkei’s record high rally in recent months.

The BOJ is set to meet on March 19.

Chinese stocks dip as US trade jitters offset positive data 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.3% and 0.1%, respectively, as optimism over stronger-than-expected trade data was largely offset by the threat of new U.S. restrictions on Chinese companies.

The U.S. Senate’s homeland security committee on Wednesday voted in favor of a bill that could potentially restrict business with Chinese biotechnology companies, the most prime example being WuXi AppTec (SS:603259).

Hong Kong shares of WuXi AppTec  (HK:2359) slid 16%, while those of affiliate WuXi Biologics (HK:2269) slumped nearly 20%. The two were the biggest drags on the Hang Seng index, which fell 0.5%.

The passing of any more U.S. trade restrictions on Chinese companies raises the prospect of more trade ructions between the world’s largest economies- a trend that bodes poorly for the struggling Chinese economy.

This notion, coupled with fleeting cheer over U.S. interest rate cuts, saw broader Asian markets move in a flat-to-low range on Thursday.

Australia’s ASX 200 rose 0.1% as data showed the country’s trade balance grew slightly less than expected in January. Still, the index remained in sight of a record high. 

South Korea’s KOSPI fell 0.2% on some profit-taking in technology stocks, while futures for India’s Nifty 50 index pointed to a muted open after it, and the BSE Sensex 30, eked out record highs on Wednesday.