The ASX went nowhere, while Japan's Nikkei stock index surged and the yen got crunched after the country's central bank defied markets to maintain its current bond buying program.
See how the trading day's events unfolded with insights from our business reporters and market analysts on the ABC News live markets blog.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Market snapshot at 4:45pm AEDT
By Michael Janda
ASX 200: +0.1 per cent to 7,393
All Ordinaries: +0.2 per cent to 7,610
Dow Jones: -1.1 per cent to 33,911
S&P 500: -0.2 per cent to 3,991
Nasdaq: +0.1 per cent to 11,095
FTSE 100: -0.1 per cent to 7,851
Eurostoxx 600: +0.4 per cent to 456
Australian dollar: Steady at 69.90 US cents
Bitcoin: -0.1 per cent to $US21,292
Spot gold: -0.6 per cent at $US1,897/ounce
Brent crude: +1 per cent to $US86.74
Iron ore: +1.9 per cent to $US121.70/tonne
The ASX closes basically where it started
By Michael Janda
So, we've had a whole trading day where basically nothing happened, at least for the major indices overall.
The ASX 200 index closed up 0.1 per cent at 7,393, basically where it was around 10:15am AEDT, while the All Ords gained 0.2 per cent to 7,610.
The big equity moves have been happening in Japan, where the central bank's decision to keep 10-year bond rates effectively capped at 0.5 per cent has seen the Nikkei jump 2.5 per cent to 26,800.
Likewise with currencies. While the Australian dollar is virtually unchanged against the greenback at 69.9 US cents, it has jumped 2.2 per cent against a dropping yen to 91.46.
Industrials, healthcare, tech and consumer cyclical stocks all did well on the back of economic and interest rate optimism.
Thanks for sticking with me for the trading day, you'll have Emilia Terzon with you tomorrow morning to guide you through the market action.
Qantas flight from Auckland to Sydney issues mayday call
By Michael Janda
In breaking news, Qantas flight QF144 from Auckland to Sydney, due to land around 3:30pm AEDT, has made a mayday call reporting engine trouble.
Emergency services are on stand-by for its arrival as a precaution.
ABC News will have updates in this story as events unfold and more details emerge.
Aussie dollar extends gains against yen on Bank of Japan's shock non-move
By Michael Janda
The Australian dollar has extended its gains against the Japanese yen, following the Bank of Japan's surprise non-move to keep its yield curve control (YCC) program unchanged.
The Australian dollar was up 2.3 per cent to 91.57 Japanese yen by 2:55pm AEDT, around an hour after the BoJ announced its decision.
Markets had been strongly betting that the BoJ would either raise its target rate on 10-year bonds above 0 per cent, widen the 0.5 of a percentage point range it will allow rates to deviate from its target or ditch yield curve control altogether.
However, Commonwealth Bank chief economist Stephen Halmarick said he was not surprised that the BoJ held firm, given comments from the central bank late last year.
"Despite the clear signal from the BoJ that the widening of the 10-year JGB [Japanese government bond] trading range was not the start of a policy shift in Japan, the market consensus holds a very different view. That is, a further unwinding of Japan's ultra easy monetary policy settings should be expected in 2023.
"We also expect the BoJ to start to normalise monetary policy in coming months. That is, the BoJ's long running YCC and negative interest rate (NIR) policy structure is coming to an end. But while the destination for monetary policy seems clear, the path is not."
One complicating factor, says Halmarick, is the looming retirement of BoJ governor Haruhiko Kuroda whose term ends on April 8.
His replacement is likely to have be announced before the next BoJ meeting in the second week of March, but will not yet have taken office.
"Governor Kuroda may feel reluctant to make further key policy changes that would bind the incoming leadership," Halmarick speculated.
"Alternatively, Governor Kuroda may like to go out with a 'bang' – declaring victory on achieving Japan's 2% inflation target and ending the long running YCC and NIR ultra easing monetary policy regime just before he leaves the BoJ."
Halmarick says upcoming wage negotiations are also critical to the timing of an exit from Japan's extreme monetary stimulus.
"The shunto wage negotiations start in March. They bring together the largest Japanese companies and key unions. The shunto outcomes set the tone for pay rises across industries in Japan."
He says a pay increase above 3 per cent might give the BoJ confidence that inflation is becoming entrenched — unlike most central banks at the moment, given the past three decades or so, the BoJ is far more concerned that inflation will fall back down, rather than becoming entrenched at high levels.
"The following meeting is on 28 April, the first for the new Governor. This meeting will benefit from some information on shunto outcomes and updated economic and inflation forecasts by BoJ staff. The following meeting on 16 June will have a considerable amount of new wage and inflation data.
"We expect the BoJ would have ended both YCC and NIR by the end of the June meeting. To be clear, this means that the 10 year JGB yield target has been abandoned, the bond purchase program is ended and the official interest rate has been raised from -0.1% to 0%. As stated, while the destination seems relatively clear, the path to get there is not."
Bank of Japan sticks to bond targets, yen slumps
By Michael Janda
Just as I was comparing Haruhiko Kuroda to Godot, the Bank of Japan (BoJ) has come out with a decision.
That decision is to stay the course and both keep the yield curve control (YCC) program, the target rate of 0 per cent, and the band within which it will allow rates to fluctuate (0.5 percentage points).
In short, the BoJ will keep printing money to buy enough Japanese government bonds to keep the 10-year bond rate below 0.5 per cent ... at least for now.
The decision has pummeled the yen, which was down 1.75 per cent against the Australian dollar at 91.09 by 1:50pm AEDT.
Waiting for Kuroda
By Michael Janda
Like a sequel to Samuel Beckett's famous play, traders are still waiting for the Bank of Japan, led by governor Haruhiko Kuroda, to announce the future of yield curve control (YCC).
Reuters is reporting that a decision is likely between 2-4pm AEDT, but there is no set time for an announcement.
In anticipation of either the watering down or abandonment of the BoJ's program to keep 10-year Japanese government bond rates below 0.5 per cent, traders again pushed the rate above 0.5 per cent for the fourth trading day in a row.
I think that's what you might call a strong hint about what they want Kuroda and his colleagues to announce today.
"The trade-off for the BOJ here is shocking the market and creating some volatility event versus sort of digging yourself deeper into the hole," James Athey, investment director at Abrdn, told Reuters.
Athey, who has a short position on Japanese government bonds (basically a bet on their price falling), said the best course of action for the central bank would be to get rid of YCC.
"Now is the time, because a lot of investors are short," he added.
Of course he would say that, given his institution stands to make a lot of money if the BoJ stops buying bonds and therefore the price of them tumbles.
But, as the Reserve Bank of Australia found out in 2021, there's only so long that even a central bank can swim against the tide before the market swamps it (except, perhaps, if you're the US Fed).
Are Australian landlords champion tax dodgers?
By Michael Janda
Tax law academic Dale Boccabella from UNSW believes they are and, judging by recent crackdowns on swathes of rental property deductions, the ATO agrees.
Although it seems like small business owners are right up there in the tax dodging stakes too:
"Australia's "tax gap" — the gap between what is collected and what would be collected if the law was applied properly — amounts to $33 billion per year according to tax office calculations, which is 7 per cent of what should be collected.
"Much of it — $12 billion — is due to incorrect filings by small businesses. But one component, worth $1 billion, relates to residential rental property owners."
Boccabella's solution? Perhaps ditch some more of the property tax breaks that attract people looking to minimise their contribution to the public purse.
"It would probably help to make the tax treatment of rental property ownership less generous. The interaction of negative gearing and the capital gains tax discount may attract landlords who want to minimise tax.
"Regardless of the recent deduction denials, this sector needs much more effective enforcement of the rules that exist. This may mean heavier penalties for those who deliberately and repeatedly cheat or fail to meet their obligations — this includes landlords and their tax agents."
Full details in his article, originally published on The Conversation.
ASX still little changed at lunchtime
By Michael Janda
There are quiet days on the market and then there are quiet days on the market.
Today is definitely one of the latter so far.
The All Ords is still less than 0.1 per cent higher just before 1:00pm AEDT, as it was at the open, at 7,604 points.
The ASX 200 likewise is still 0.1 per cent higher at 7,392.
Maybe this is where all the traders have gone with the sun shining in Sydney and the extended summer holiday period (for some lucky souls) still in play until after the effective Australia Day long weekend.
Investors are clearly optimistic that summer also means more shopping, at least for electronics. JB Hi-Fi and Harvey Norman were both up 3.1 per cent.
Why Japan may have to (finally) abandon ultra-low monetary policy
By Michael Janda
Japan has been a world leader in ultra-low interest rates and monetary policy innovations around money printing in an effort to stimulate an economy that's been stuck in, or close to, deflation since an asset bubble spectacularly blew up in the late 1980s.
But it seems like the rampant inflation across the rest of the world has finally penetrated the Japanese economy.
Yes, it's headline inflation rate is about half of what we're seeing in Australia and around a third of some of the peaks seen across Europe, but it is way above anything Japan has experienced in recent history and still climbing.
With negative interest rates and money printing schemes still in full-swing, the market is starting to say enough is enough, and it is time for Japan to follow the rest of the world in normalising monetary policy ... or at least make a small start.
Redbubble bursting?
By Michael Janda
Online art and craft marketplace Redbubble is slashing its workforce by 20 per cent and cutting its marketing spend as it tries to stop losing money.
The company expects the cost savings to total $20-25 million per year as it seeks to return to being "sustainably cash flow positive by the end of calendar year 2023".
Redbubble's CEO Michael Ilczynski said he is expecting a difficult year for discretionary spending.
"Looking ahead, we expect consumer demand to remain challenging in the near term.
"As a result, we have decided to reduce the cost base within the Redbubble marketplace to accelerate the group's return to cash flow positive."
Investors were not impressed with the outlook, with a sell-off pushing the company's share price down more than 12 per cent to 50 cents.
Nickel Industries taps investors for $673m
By Michael Janda
Nickel Industries is tapping shareholders for an additional $673 million investment to increase its ownership stake in two existing projects and to further collaboration with its Chinese business partner.
The move is part of a plan to increase its exposure to production of the raw materials essential for batteries.
The somewhat complicated deal will see Nickel pay $386 million for a 10 per cent stake in PT Huayue Nickel Cobalt, which is owned by Newstride, an affiliate of one of Nickel's major shareholders Shanghai Decent Investment (Group).
But Newstride is providing the cash for that acquisition by investment $386 million into Nickel's capital raising.
Big institutional investors are being tapped for $264 million and smaller retail investors for $29 million as part of the capital raising.
The remaining funds will be spent on acquiring an additional 10 per cent interest in the Oracle nickel project, on options with Shanghai Decent to participate in future battery materials projects, the progression of further nickel opportunities and paying down existing debts.
The company last traded at $1.12 before going on a halt ahead of the capital raising.
Market movers
By Michael Janda
A lot of love this morning for some of the so-called 'risk-on' stocks, such as biotech and fintech.
There's also plenty of support for Australia's remaining fuel refiners after Ampol revealed that profit margins at its Lytton refinery "remained above historical levels" at $US11.75 a barrel in the fourth quarter of 2022, with output up on the third quarter.
Ampol shares had jumped 3.4 per cent to $29.64 by 11:08am AEDT.
Rival Viva Energy, which owns the Geelong refinery, rode along on Ampol's coattails, up 2.2 per cent to $2.81.
Bank of Japan operating 'on borrowed time'
By Michael Janda
Central banks are in the spotlight today, with the Bank of Japan set for some big announcements expected sometime after midday AEDT.
Pepperstone's head of research Chris Weston has just put out an interesting brief on what might go down at the BoJ today.
"The main policy shifts we could see are:
1. To widen the current 10-year JGB [Japanese government bond] cap again, to 0.75% or 1% from 0.5%
2. To shift the target JGB yield from the 10-year JGB to the 5-year JGB.
3. To raise the 10-year yield target to 0.1% from 0% currently
4. To terminate and close off the YCC [yield curve control] program completely
5. To terminate the YCC adding a temporary QQE program and a commitment to provide two-way liquidity
6. To leave the policy unchanged"
Refresher: Yield curve control basically involves the Japanese central bank printing money to buy government bonds to keep the interest rates on targeted bonds within a certain range.
The markets think those interest rates are way too low given the current inflationary situation, so they are betting that the BoJ will have to raise it's targets or quit YCC altogether.
So what does Weston think will happen and how might the market respond?
"My own view is the BoJ YCC (yield curve control) program is on borrowed time – there is rising political pressure against it, the market is forcing the BoJ to buy unsustainable levels of bonds daily and Japan has a rising inflation problem that is seeing the fair value of JGB's yield rise.
"My own view is the most likely action is that we see no. 1 enacted, with the YCC band rising to 1%, subsequently giving them more time to fully abolish YCC in the months ahead. However, I acknowledge the chance of no. 5 or 6 is also high.
"The big moves in the JPY, JPN225 and JGBs come if we see no.4 or 6, with no. 5 also offering big potential movement. The pain trade is likely seen in no.6 (no change at all) – given expectations, positioning (the market is heavily short JGBs and long JPY), and options traders short delta exposure – if that plays out the JPY could get smoked."
Either way, brace for some potentially huge moves in the yen this afternoon.
ASX opens very slightly in the black
By Michael Janda
The Australian share market is posting the most modest of gains in early trade.
By 10:15am AEDT both the ASX 200 and All Ordinaries indices were up less than 0.1 of a percent at 7,392 and 7,604 respectively.
While the majority of companies on the ASX 200 were posting gains, the utilities, mining and financial sectors were weighing on the market.
The best gains were concentrated in industrials, healthcare and energy, all rising well above 1 per cent, with some tech stocks also posting healthy increases, notably US payments giant Block (which owns Afterpay and Square) up 4.3 per cent to $107.12.
Gold miners were the biggest losers as the precious metals backed away from price highs reached earlier this week.
Is there a gas 'suppliers strike' going on?
By Michael Janda
Australia's gas producers are facing fines running into the tens of millions of dollars if they breach the $12 dollar per gigajoule emergency price cap set by the government.
The gas giants have been accused of "going on a suppliers strike" by refusing to offer gas at below the temporary capped price.
Australian Competition and Consumer Commission chair Gina Cass-Gottlieb has warned the gas industry against trying to bypass the cap.
"We are looking to them for supply," she said.
"We will hope that once this reduced price at the top of the supply chain, wholesale level, flows through, it will, with competition between retailers, produce market offers that are lower."
You can listen to the full interview with Hamish Macdonald on the RN Breakfast website.
Indigenous business banking barriers
By Michael Janda
A really strong piece here from Emilia Terzon about the barriers facing many Indigenous businesspeople trying to establish or expand their enterprises.
Indigenous business consultant Naomi Anstess tells Emilia there are still many institutional and economic barriers confronting First Nations businesspeople.
"It's a white boys club," she says.
"They are finding it really difficult to access any capital.
"Aboriginal people generally don't have any inter-generational wealth, and that's due to dispossession. It creates an inability to grow."
Read Emilia's story to find out how Indigenous entrepreneurs are getting around these obstacles, and how some banks are trying to improve.
'Green' mining boom a way off says CBA
By Michael Janda
Some interesting research out this week from CBA's mining and energy analyst Vivek Dhar.
Despite all the hype around investment in the so-called "green" commodities needed for batteries and electrification, almost two-thirds of Australia's committed mining and energy investment remains in fossil fuels.
Mr Dhar says green hydrogen is the key to swing that investment in favour of renewables.
"Hydrogen projects account for 40 per cent and 60 per cent of the value of feasible and publicly announced projects respectively," Mr Dhar observed.
"If Australia is going to recreate the mining boom from the previous super-cycle sometime this decade, it will need to become a major hydrogen exporter."
I've written more about the outlook for lithium, cobalt, hydrogen and other 'green' commodities here:
NZ 'two-thirds through' housing downturn
By Michael Janda
If you thought Australian housing prices were falling fast, try going across the ditch, where the official cash rate is 4.25 per cent, well ahead of the RBA's 3.1 per cent.
ANZ analyst Miles Workman has the latest (December) on the trans-Tasman housing bust:
"The housing market maintained its southbound trajectory in December.
"Prices are now around 15 per cent below their November 2021 peak. We maintain our forecast for a peak-to-trough decline of 22 per cent."
As in Australia, where Sydney, Melbourne and now Brisbane are leading the declines, it's the big cities in NZ that are faring badly.
"Wellington remains the weak spot, with prices down 20.3 per cent year-on-year (on a 3 month moving average basis). Auckland takes out second-weakest at -16.8 per cent y/y.
"Our expectation is that there will be some regional 'catch-down' as the housing downswing matures. But the December data didn't really suggest Wellington prices have found a floor: the HPI [house price index] here fell 2.2 per cent month-on-month."
There you go — if the RBA does have to keep hiking rates towards 4 per cent and potentially beyond, our friends across the ditch are offering a preview of what that might look like for further house price falls.
Central banks dominate the financial news
By Michael Janda
Investors are eyeing off a Bank of Japan (BoJ) meeting, the results of which are likely to be known around lunchtime AEDT.
With inflation (finally) taking off in Japan, the central bank there is under growing pressure to ditch its yield curve control (YCC) policy.
In plain English, this is where the central bank basically prints money to buy bonds of a certain maturity to keep interest rates on those bonds within a target range.
As the Reserve Bank of Australia found out the hard way in late 2021, when investors lose faith that the target interest rate can be sustained it can pretty quickly blow up the policy.
The BoJ has a fair bit more market power than the RBA, but it's not completely immune from market forces.
The analysts at NAB reckon the BoJ might first loosen the range of its rate target this month before totally ditching the program at a future meeting.
The other central bank news came out overnight, with Bloomberg reporting that the European Central Bank is considering backing away from a string of 0.5 percentage point rate rises.
Instead, it now seems more likely there will be a 0.5 percentage point rate rise in February before the ECB moves to 0.25 percentage point rate hikes.
US markets heading for a mixed close
By Michael Janda
As trade starts wrapping up on Wall Street, a 6.2 per cent drop for investment banking giant Goldman Sachs has weighed on the market.
Goldman reported a bigger-than-expected 69 per cent slump in fourth quarter profit and only made $US1.19 billion in the three months to December 31.
The declining results have sparked a dramatic reduction in staff, with the bank cutting 6 per cent of its global workforce, or around 3,200 people.
It's a big part of the Dow Jones Industrial Average, so not surprise that index is down 1 per cent.
However, Elon Musk's Tesla has surged more than 7 per cent, and is holding up the Nasdaq (+0.2 per cent) and S&P 500 indices (-0.1 per cent).
It gained on reports that its sales of electric vehicles in China were surging this month after significant price cuts.
