Most Asian stocks maintained a narrow range on Tuesday as markets remained cautious ahead of key U.S. inflation data. Meanwhile, Japanese stocks experienced extended losses amid more indications that the Bank of Japan will raise interest rates soon.
The Japanese indices, Nikkei 225 and Topix, declined following the Bank of Japan’s decision to raise interest rates promptly. Japanese stocks were the worst performers in Asia on Tuesday, with both indices reaching their lowest levels in two weeks, now trading significantly below the record highs achieved last week.
The release of the Producer Price Index (PPI) on Tuesday, which came slightly stronger than expected, increased bets that persistent inflation and wage strength would compel the Bank of Japan to end control over the yield curve and negative interest rate policies in the near term.
This reading comes just one day after several media reports hinted that the Bank of Japan is considering stepping back from its extremely cautious stance in mid-March or late April. The focus this week is also on wage negotiations between Japanese companies and major labor unions, with any significant wage increases likely to elicit a strong response from the Bank of Japan.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
