Asian stocks rise, Nikkei extends rebound on BOJ comments

Investing.com-- Most Asian stocks rose on Wednesday as they recovered from steep losses earlier this week, while Japanese markets rose sharply following some encouraging comments on interest rates from the Bank of Japan. 

Barring Japan and South Korea, gains in other Asian markets were still limited, as the prospect of a global economic slowdown still kept sentiment fragile. 

Regional markets took some positive cues from a strong overnight close on Wall Street, although a recovery in U.S. stocks also remained tenuous after bruising losses on Monday.

Still, U.S. stock index futures reversed early losses and rose in Asian trade. 

Japan’s Nikkei, TOPIX extend rebound rally 

The Nikkei 225 and the TOPIX indexes were the best performers in Asia on Wednesday, rising more than 3% each. Coupled with strong gains on Tuesday, the two indexes had now reversed Monday’s rout, which saw both indexes tumble to eight-month lows and into bear market territory. 

Extended gains in Japanese markets came after BOJ Deputy Governor Shinichi Uchida said the central bank won’t hike interest rates when markets were unstable.

His comments sparked some optimism that Japanese interest rates will not rise as sharply as initially forecast by the bank. The BOJ had raised interest rates last week and flagged more increases this year, with its unexpectedly hawkish turn serving as a key weight on Japanese markets.

The Japanese yen weakened sharply against the dollar, also benefiting local stocks. 

Focus is also on key Japanese earnings on Wednesday, with SoftBank Group Corp. (TYO:9984) and Honda Motor Co Ltd (TYO:7267) set to report later in the day. The stocks were up 5.5% and 3.5%, respectively.

Gains in Japan spilled over into other regions, albeit at a slower pace. South Korea’s KOSPI added 2.5%, extending a rebound from near nine-month lows. 

Australia’s ASX 200 rose 0.2%, while futures for India’s Nifty 50 index pointed to a positive open, with the index set for a strong recovery after a rebound on Tuesday petered out. 

Hong Kong’s Hang Seng index added 1% in choppy trade, as buying in heavyweight technology stocks offset weakness in other sectors.

Chinese stocks struggle, more economic cues on tap

Mainland Chinese stocks lagged their peers, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes moving in a flat-to-low range as sentiment towards the country remained strained.

Both indexes were close to their lowest levels in 2024, after a series of weak economic readings drummed up concerns over a slowing recovery. Scant details on more stimulus measures from Beijing also kept traders averse to Chinese markets. 

Focus this week is on more economic readings from the country, with trade and inflation data due in the coming days.