Investing.com - Shares fell sharply in Tokyo on Thursday as the Bank of Japan held policy steady, dashing some expectations of further easing and sending the yen soaring.
The Nikkei 225 plunged 3.02%, after the Bank of Japan monetary policy held steady as expected on Thursday at ¥80 trillion annually, and shunned further moves on negative interest rates even as downside risks to a 2% target rise. USD/JPY changed hands at 109.34, down 1.89%.
Expectations of further easing were in place after Bloomberg reported that the BoJ could expand the negative interest rate policy it put in place in January at the conclusion of its rate review.
Earlier in Japan, household spending eased 5.3% year-on-year in March, more than the 4.2% drop expected. As well, national core CPI dropped 0.3% year-on-year for March, more than the 0.2% fall seen even as the unemployment rate dipped to 3.2% from an expected 3.3% level.
Japan also reported provisional industrial production for March month-on-month rose 3.6%, more than the 2.9% gain seen, while retail sales slipped 1.1% year-on-year, less than the 1.5% declined expected.
The Federal Reserve's policy making Federal Open Market Committee left short-term interest rates unchanged Wednesday as expected, but tweaked its policy statement, possibly preparing financial markets for another modest rate hike in coming months.
The FOMC, which started raising the federal funds rate from near zero in mid-December, left the funds rate in a 25 to 50 basis point target range, on a 9-1 vote, as Kansas City Federal Reserve Bank President Esther George dissented in favor of an immediate rate hike for the second straight meeting.
Still, the tone was partly downbeat in the statement.
"Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed. Growth in household spending has moderated, although households real income has risen at a solid rate and consumer sentiment remains high." the Fed said.
The S&P/ASX 200 rose 0.39%. The Shanghai Composite Index was last down 0.26%. Hong Kong's Hang Seng index was last up 1.22%.
The yuan declined against the U.S. dollar on Thursday after the People's Bank of China set a weaker fixing for the first time in three days at 6.4954 compared
with 6.4837.
Overnight, U.S. stocks rallied late on Wednesday afternoon following a relatively dovish monetary policy statement from the Federal Reserve, offsetting earlier losses from a massive sell-off in Apple shares (NASDAQ:AAPL).
Apple (NASDAQ:AAPL) dragged down all three major indices, one day after posting its first quarterly decline in revenues in 13 years. It came iPhone unit sales fell sharply below analysts' expectation, amid concerns of weakening demand in the global smartphone market. At the same time, Apple offered forward guidance in terms of third quarter revenue and gross margin below analysts' forecasts.
The Dow Jones Industrial Average added 51.23 or 0.28% to 18,041.55, while the S&P 500 Composite index gained 3.45 or 0.16% to 2,095.15, after receiving a boost from the Fed. On the S&P 500, eight of 10 sectors closed in the green as defensive stocks in the Utilities and Telecommunication industry led. Stocks in the Technology and Health Care sectors lagged, each falling more than 0.15%.
The NASDAQ Composite index, meanwhile, closed as the session's underperformer after losing 25.14 or 0.51% to 4,863.14. Tech stocks weighed on the NASDAQ on Wednesday, following the latest batch of disappointing earnings. Already, Apple, Alphabet Inc (NASDAQ:GOOGL), Twitter Inc (NYSE:TWTR), Netflix Inc (NASDAQ:NASDAQ:NFLX) and Microsoft Corporation (NASDAQ:NASDAQ:MSFT) have failed to meet revenue forecasts during the previous quarter.