Asia Stocks Pull Back on Profit-Taking; BOJ Governor Dashes Rate Hike Bets
Asian equities retreated on Friday as investors locked in gains from a blistering April rally, with Japan’s Nikkei 225 suffering the steepest fall after BOJ Governor Kazuo Ueda steered clear of signalling an April rate hike. Despite the pullback, MSCI’s broadest index of Asia-Pacific shares outside Japan remained on track for a second consecutive weekly gain, buoyed by growing optimism that the Middle East conflict may be nearing a resolution.
Market Snapshot
| Index | Close | Change |
|---|---|---|
| Nikkei 225 | 58,475.90 | −1.75% |
| Hang Seng | 26,143.60 | −0.95% |
| Shanghai Composite | 4,051.43 | −0.10% |
| S&P BSE Sensex | 78,290.04 | +0.38% |
| ASX All Ordinaries | 9,168.70 | −0.05% |
Japan: Nikkei Sinks 1.75% as Ueda Sidesteps Rate Hike Signals
The Nikkei 225 plunged 1,042 points — the session’s biggest mover — after BOJ Governor Ueda highlighted Japan’s low real interest rates and robust corporate profits while speaking at the IMF meetings in Washington, but offered no hint that a rate increase was imminent.
Market pricing for an April rate hike at the BOJ’s April 27–28 meeting slid to around 10%, down sharply from roughly 70% earlier this month. “In the past few rate hikes, the BOJ dropped hints to lay the groundwork for a policy shift. The fact there was no such hint today means an April hike may be off the table,” said Kazutaka Maeda of Meiji Yasuda Research Institute.
The yen weakened to 159.48 per dollar as traders unwound hawkish bets. The Japan 10-year yield rose 2.1 basis points to 2.421%, reflecting the mixed policy signals. The IMF urged Japan to raise rates and keep fiscal stimulus targeted, adding to the complex backdrop.
South Korea: KOSPI Retreats but Holds April Gains
The KOSPI pulled back from its recent recovery rally but has recouped nearly all of March’s 19% tumble, with $4.2 billion of foreign capital pouring back into Korean equities this month. The index is up an impressive 44.5% year-to-date, building on a 75% surge in 2025.
However, risks remain. The Korean won continues to languish near 17-year lows, raising costs for the country’s energy-dependent economy. Samsung Electronics — the market’s bellwether — faces a potential labour disruption, with its union expecting up to 40,000 workers to join a rally on April 23 over wages ahead of a possible strike.
On the positive side, South Korea’s bond market has been resilient. The benchmark 10-year yield touched its lowest since February, and Korean sovereign debt is set to benefit from anticipated inclusion in the FTSE World Government Bond Index, which could attract $50–70 billion in passive fund flows.
Greater China: Flat as Traders Await LPR Decision
The Shanghai Composite slipped 0.10% to 4,051.43, while Hong Kong’s Hang Seng lost 0.95% to 26,143.60 as investors took profits after the region’s strong recovery this month.
China is expected to keep benchmark lending rates steady following solid Q1 GDP data, suggesting Beijing sees limited urgency to ease monetary policy for now. Meanwhile, the Iran war continues to drive up costs and dampen sentiment at China’s largest trade fair, the Canton Fair, underscoring how geopolitical tensions are filtering through to the real economy.
India: Sensex Edges Higher but Wipro and HDFC Life Weigh
Indian benchmarks bucked the regional trend, with the Sensex rising 0.38% to 78,290 and the Nifty 50 gaining 0.34% to 24,279. Easing oil prices — Brent remains below $100 per barrel — are a positive for India, the world’s third-largest oil importer.
However, gains were capped by Wipro’s 3% slide after the IT outsourcer issued a weak forecast citing spending curbs by U.S. banking clients, and HDFC Life Insurance fell 3.2% on a quarterly drop in new business value. Malaysia’s Q1 GDP growth of 5.3% also painted a broadly positive picture for ASEAN economies.
Macro Backdrop: Oil, Dollar, and Peace Talks
The dominant macro theme remains the Middle East. A 10-day ceasefire between Israel and Lebanon went into effect Thursday, and President Trump indicated the U.S. and Iran could meet over the weekend, when their current ceasefire is set to expire. However, the Strait of Hormuz — through which a fifth of the world’s oil supply typically flows — remains largely closed.
Oil: Brent crude dropped over 1% to $98.14/bbl, while WTI fell 1.4% to $93.37, pinned below the psychologically important $100 threshold on peace deal optimism.
Dollar: The DXY hovered at 98.24, near its lowest since March 2, as safe-haven demand faded. The risk-sensitive Australian dollar fetched $0.7167, drifting near a four-year high.
Gold: Spot gold held steady around $4,783/oz, eyeing a fourth consecutive weekly gain on peace deal hopes.
US overnight: The S&P 500 and Nasdaq rose modestly to record closing highs for a second straight day. However, Netflix shares plunged about 9% in after-hours trading after issuing a downbeat revenue forecast and announcing co-founder Reed Hastings would not seek re-election to the board.
What to Watch Next
- Weekend US-Iran talks: The current ceasefire expires April 21. Any breakthrough — or breakdown — will set the tone for Monday’s open across Asia.
- China LPR decision: The People’s Bank of China is expected to hold benchmark lending rates steady, but any surprise cut could lift Chinese and Hong Kong equities.
- BOJ policy meeting (April 27–28): With April rate hike bets now at ~10%, the focus shifts to whether Ueda’s upcoming outlook report revisions in late April alter the trajectory.
- Samsung Electronics union rally (April 23): A potential strike involving up to 40,000 workers could disrupt semiconductor supply chains and add volatility to Korean markets.
- Indian bank earnings: HDFC Bank and ICICI Bank report on Saturday — key tests for the earnings season amid a cautious post-rally environment.
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