Asian stocks weaker with Nikkei down after BoJ holds policy steady

Investing.com – Asian stocks were mainly weaker on Friday with the Nikkei ending the morning down ahead of a Bank of Japan policy review in which the board unanimously, as expected, stood pat on its monetary base policy target and pace of asset purchases.

Japan’s Nikkei 225 Index traded down 0.38% in the afternoon session despite a weaker yen, while Hong Kong’s Hang Seng dipped 0.41%, and China’s Shanghai Composite fell 0.60%.

Overnight lackluster manufacturing and jobs data sent U.S. stocks mixed to lower though optimism that the U.S. economy is improving, evidenced by the Federal Reserve's decision to taper monthly bond purchases, cushioned losses.

U.S. stocks flounder on sluggish U.S. indicators; Dow inches up 0.07%At the close of U.S. trading, the Dow Jones Industrial Average rose 0.07%, the S&P 500 index fell 0.06%, while the Nasdaq Composite index fell 0.29%.

On Wednesday, the Fed announced that it would cut its USD85 billion-a-month bond-buying program by USD10 billion in January now that recovery is gaining steam.

Fed bond purchases tend to weaken the dollar by driving down long-term interest rates that send investors to assets like stocks to encourage investing and hiring.

While Fed tapering may take away monetary support for stocks, it also signaled to markets that the economy is gaining steam and headed to an environment ripe for improving corporate fundamentals.

Meanwhile, less-than-stellar economic indicators in the U.S. dampened spirits on Wall Street and sparked profit taking.

The Federal Reserve Bank of Philadelphia said that its manufacturing index jumped to 7.0 for December from November’s 6.5 reading, though analysts were expecting the index to rise to 10.0 this month.

A separate report showed that U.S. existing home sales declined 4.3% to a seasonally adjusted 4.90 million units in November from 5.12 million in October. Analysts were expecting U.S. existing home sales to fall 1.5% to 5.03 million units last month.

Also on Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Dec. 14 increased by 10,000 to a seasonally adjusted 379,000, the highest level since March.

Analysts were expecting U.S. jobless claims to fall to 334,000 last week from the previous week’s revised total of 369,000.

On Friday, the U.S. is to round up the week with revised data on third-quarter GDP.