Asian Markets Struggle for Direction as China’s Rally Cools, Japan Gains on BOJ Stability

Asian stock markets remained subdued on Wednesday, with Chinese equities pulling back from a stimulus-fueled rally while Japanese stocks held firm after the Bank of Japan (BOJ) maintained its interest rates as expected.

Wall Street Cues Weigh on Asia, Trump’s Trade Tariff Concerns Linger

🔹 Asian markets tracked weak overnight sentiment from Wall Street, where major U.S. indices tumbled after a brief rebound from correction territory.
🔹 U.S. stock index futures inched higher ahead of the Federal Reserve’s interest rate decision later in the day, with no rate changes expected.
🔹 Investors remain cautious about potential new trade tariffs from U.S. President Donald Trump, who has hinted at additional trade actions by early April.
🔹 Geopolitical focus remains on the Russia-Ukraine peace negotiations, as tensions continue to impact global sentiment.

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Japan Stocks Rally as BOJ Signals Inflation Expectations

Japanese stocks extended gains, with the Nikkei 225 and TOPIX rising 0.7% and 1%, respectively.

📌 Key Drivers:
✅ Berkshire Hathaway’s increased holdings in Japan’s top trading houses boosted investor confidence.
✅ The BOJ held its benchmark interest rate steady at 0.5%, in line with expectations.
✅ Policymakers signaled expectations for higher inflation due to rising wages, strengthening the case for rate hikes in the coming months.
✅ Spring wage negotiations are expected to fuel further inflationary pressures, keeping the BOJ on a hawkish path.

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China, Hong Kong Stocks Take a Breather After Recent Rally

🔹 China’s CSI 300 and Shanghai Composite were flat, while Hong Kong’s Hang Seng managed a modest gain as local tech stocks remained strong.
🔹 Chinese markets had surged in recent weeks, fueled by Beijing’s pro-growth policies and AI-driven optimism.
🔹 Tech giant Xiaomi (HK:1810) jumped 2%, hitting a record high after strong Q4 earnings and an upgraded electric vehicle sales forecast.

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Mixed Performance in Other Asian Markets

📉 Australia’s ASX 200 edged lower on profit-taking.
📈 South Korea’s KOSPI rose 0.7%, brushing off political tensions ahead of an impeachment ruling on President Yoon Suk Yeol.
📈 Singapore’s Straits Times index climbed 0.4% on positive earnings momentum.
📈 India’s Nifty 50 futures pointed to a strong opening, as local markets rebounded from recent losses.

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Outlook: Will the Fed and Trump’s Trade Policies Shake Markets?

With the Federal Reserve’s rate decision and Trump’s trade tariff threats looming, Asian markets may remain volatile in the coming sessions. Investors are watching for central bank guidance, trade war developments, and geopolitical shifts to determine the next major market moves.

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