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Asia – Pacific Stocks Drop as India’s Central Bank Leaves Rate Unchanged at 4%

Asia-Pacific markets traded mostly up Wednesday but shares on the Chinese mainland and in Hong Kong lost ground.

Australia’s ASX 200 advanced 0.61% to 6,928, with all sectors closing higher. Major banking stocks reversed earlier losses to finish in the green: ANZ shares rose 0.32%, the National Australia Bank added 0.42%, Westpac was up 0.57% while Commonwealth Bank shares advanced 0.58%.

In Japan, the Nikkei 225 retraced most of its earlier gains, but still closed up 0.12% at 29,730.79. The Topix index rose 0.67% to 1,967.43.

South Korea’s Kospi added 0.33% to 3,137.41.

Asia Kospi
South Korea’s KOSPI Index performance chart for the past week

Samsung Electronics shares dipped 0.47% after the chip and smartphone maker issued earnings guidance for the first three months of 2021. Samsung said it estimated operating profit for the quarter at 9.3 trillion Korean won ($8.3 billion), up 44% from a year ago. The company did not give a detailed breakdown, which is due at the end of this month.

Hong Kong’s Hang Seng index declined 0.91% to 28,674.80 as the market returned online after being closed since Friday.

Chinese mainland shares also struggled for gains. The Shanghai composite finished fractionally lower at 3,479.63 while the Shenzhen component fell 0.74% to 13,979.31.

Wednesday’s session follows overnight losses on Wall Street, where U.S. stocks fell from record levels.

“US equities softened while European indices outperformed after being closed on Monday. News that half the European population will be able to be vaccinated by June was a shot in the arm for the markets,” analysts at ANZ Research said in a morning note.
India’s central bank leaves rates on hold

Elsewhere in Asia, Indian stocks rose in afternoon trade, with the Nifty 50 up 1.24% and the Sensex higher by 1.26%. The Reserve Bank of India left its key policy rate unchanged at 4% and reiterated an accommodative stance “as long as necessary” to sustain growth.

India is experiencing a second wave of coronavirus outbreak, forcing authorities in some states to step up social restrictions. Investment bank Goldman Sachs on Tuesday downgraded the country’s growth in the April-June quarter.

Though India’s recovery prospects strengthened with the rollout of vaccines, the recent surge in infections has made the outlook even more uncertain and “needs to be closely watched,” RBI governor Shaktikanta Das said in a statement.

He said localized and regional lockdowns in Asia “could dampen the recent improvement in demand conditions and delay the return of normalcy.”

“The stance of monetary policy will remain accommodative till the prospects of sustained recovery are well secured while closely monitoring the evolving outlook for inflation,” he added.

Asian Markets Currencies & Oil

In the currency market, the U.S. dollar traded relatively flat at 92.358 against a basket of its peers. The dollar index slipped from levels near 93.200 reached in the previous week.

The Japanese yen changed hands at 109.84 per dollar, weakening from an earlier level around 109.56. The Australian dollar traded down by 0.43% at $0.7632.

Asia
Japanese Yen/USD one year performance chart

Oil prices traded lower Wednesday during Asian trading hours, following overnight gains on the back of strong economic data from the U.S. and China.

U.S. crude was lower by 0.72% at $58.9 a barrel while global benchmark Brent declined 0.62% to $62.35.