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[MARKET ANALYSIS] Asia-Pac stocks take impetus from the gains on Wall St, where markets reversed the post-FOMC moves, while Nikkei rallies after BoJ hiked rates in a 7-2 vote

A regional wrap of this kind has three distinct threads running at once, and the historical read differs on each.

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[MARKET ANALYSIS] Asia-Pac stocks take impetus from the gains on Wall St, where markets reversed the post-FOMC moves, while Nikkei rallies after BoJ hiked rates in a 7-2 vote

Japanese BoJ Interest Rate Decision 1.25% vs. Exp. 1.25% (Prev. 1%)

BoJ hikes rates by 25bps to 1.25%, as expected, with the decision made by 7-2 vote as board members Asada and Sato dissented, while BoJ says it will continue to raise rates in response to economic and price developments as well as financial conditions

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APAC Stocks: Positive

  • Asia-Pac stocks are mostly higher as the region takes impetus from the gains on Wall St, where markets reversed the post-FOMC moves amid a Fed credibility boost and lower oil prices.

ASX 200: +0.1%

  • Eked slight gains in range-bound trade with gains in tech and miners counterbalanced by weakness in defensives, telecoms, energy and financials, while there were comments from RBA Governor Bullock that lowering inflation is essential and that the key question is whether the tightening in monetary policy to date will be sufficient to bring inflation back to the target in a reasonable time.

Nikkei 225: +1.7%

  • Gained following the BoJ announcement to hike rates by 25bps, as widely expected, with the decision made by a 7-2 vote as Takaichi-appointed board members Asada and Sato dissenting, while the language from the central reaffirmed a hiking bias but didn't signal any major urgency as it also noted inflation expectations are heightening moderately and that underlying inflation is approaching 2%. Furthermore, the latest inflation data from Japan printed softer-than-expected on all key metrics of the report.

KOSPI +2.9%

  • Rallied with tech stocks buoyed following the outperformance in the Nasdaq stateside, while South Korean President Lee ruled out sending troops to the Strait of Hormuz.

Hang Seng & Shanghai Comp: Hang Seng +0.8% / Shanghai Comp +1.0%

  • Chinese markets conform to the broad positive mood, with reports noting that the US is expected to delay announcing excess manufacturing capacity tariffs till after the Trump-Xi summit, while MOFCOM said Chinese and US trade teams remain in close contact over negotiations on mutual tariff reductions covering USD 30bln. In addition, the PBoC conducted 7-day and 14-day reverse repo operations ahead of the National Day holidays in early October.

US Equity Futures: Flat

  • Paused overnight after clawing back post-FOMC losses yesterday and ahead of quadwitching.

European Equity Futures -0.4%

  • Indicate a lower cash market open with Euro Stoxx 50 down 0.4% after the cash market closed with gains of 0.9% on Thursday.
Context

A Wall St reversal of the initial post-FOMC move is a familiar pattern: the knee-jerk reaction to the statement and press conference has often retraced within a session as positioning and the dot-path are re-digested, and the reversal tends to matter more than the first move for the follow-through into Asia. The BoJ leg is the more substantive one; a widely flagged hike with a split vote and language that reaffirms a hiking bias without urgency has, in past tightening phases from this central bank, been taken as yen-supportive only at the margin, with the equity rally reflecting the removal of event risk rather than a hawkish surprise. The distinguishing feature here is the composition of the dissenters, board members arguing against the hike, which inverts the usual hawk-dove dissent pattern and bears on the pace of the next move rather than its direction. The China leg is tariff-headline driven, a channel that has dominated that market's risk premium through repeated negotiation cycles, with the summit timeline now the operative catalyst. Worth noting is the quadwitching backdrop for US futures, which has historically amplified end-of-week flows and muddied the read-through from overnight sessions. As a session recap rather than fresh news, the signal is confirmatory.

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