China inflation, China trade data, Nikkei high

The Bank of Japan stuck to its ultra-loose monetary policy last year, keeping interest rates at -0.1% and standing pat on its yield curve control policy that keeps the upper bound for 10-year Japanese government bond yield at 1% as a reference.

The central bank also remains wary of unwinding its policy stance, on fears that any premature move could jeopardize recent nascent economic improvements.

Richard Kaye, portfolio manager at Comgest says, “I think there’s even a possibility that we will not see fundamental change in monetary policy here.”

Kaye argues against what consensus expects will be a policy unwind from the BOJ soon, adding “there’s not that much pressure to change them. And again, on the inflation story, the idea is very much Japan is suddenly going to change its quantitative stance, I don’t think the data supports that.”

What investors will now be focusing on will be the annual spring wage negotiations in March, which is when the BOJ could likely make changes, if any, to its policy.

“But if we suddenly see a major change in wages, then we will see a major change in inflation readings, because so far wages are alright. There’s not that much pressure to change them,” Kaye says.

— Shreyashi Sanyal

China’s exports rose more than expected in December, but failed to offset an overall decline in 2023, customs data showed Friday.

Exports rose by 2.3% year on year in U.S. dollar terms last month, more than the 1.7% increase forecast by a Reuters poll. Imports rose by 0.2% in December from a year earlier in U.S. dollar terms, slightly less than the 0.3% increase expected the Reuters poll.

For the whole of 2023, exports fell 4.6% while imports dropped 5.5%, according to customs data.

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— Evelyn Cheng

Shares in mainland China and Hong Kong reversed losses after China’s consumer price index recorded a softer fall then expected in December.

The Hang Seng index rose 0.32%, while the CSI 300 was up 0.21%, after both opening in negative territory,

The country recorded an inflation rate of -0.3%, compared with -0.5% in November and also a softer fall compared with the 0.4% expected in a Reuters poll.

China’s producer price index — which measures the change in the price of goods sold by manufacturers — recorded a 2.7% fall year-on-year, softer than the 3% decline in November.

— Lim Hui Jie

Oil prices rose after Britain and the United States carried out military strikes against targets in Houthi-controlled areas of Yemen, U.S. officials said, as tensions in the Red Sea mounted.

Global benchmark Brent jumped 1.87% higher to $78.90 a barrel Friday Asia trading hours, while the U.S. West Texas Intermediate futures climbed 2.05% to $73.49 per barrel.

“These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation in one of the world’s most critical commercial routes,” U.S. President Joe Biden said in a statement Thursday evening.

– Lee Ying Shan

Shares of Japan retail holding company Fast Retailing spiked almost 7% after the company posted better than expected first quarter results. The company’s fiscal first quarter runs from September to November 2023.

The company is the largest stock on the Nikkei 225 index, making up 10.45% of its weightage.

Fast Retailing’s primary subsidiary is clothing chain Uniqlo, but also has other brands in its stable, such as discount casual wear retailer GU.

In an earnings release, the company said it has posted a net profit of 107.80 billion yen ($739.57 million), a 26.7% rise compared with the same period a year earlier. Total revenue was up 13.2% year on year to 810.83 billion yen, driven mainly by increased sales in Uniqlo.

Many investors have been bullish on technology stocks over the past few months, and Goldman Sachs is no exception.

The investment bank highlighted opportunities in the Asian tech hardware industry, citing “focal points” for 2024, such as cyclical recovery, artificial intelligence and the impact of geopolitical conditions, including changes in the semiconductor supply chain.

“While we expect a very…