Key facts
- Japan's central bank increased its short-term policy rate to 1%, marking the highest level since 1995.
- The Bank of Japan will reduce its bond buying by approximately 200 billion yen per quarter until April 2027.
- Australia's Reserve Bank maintained its interest rate at 4.35%.
- Oil prices remained above $80 a barrel amid cautious sentiment regarding a U.S.-Iran peace deal.
- SpaceX's market value exceeded $2.6 trillion following a stock rally.
Japan's central bank on Tuesday raised its short-term policy rate to 1%, the highest level since 1995, while also signaling a pause in its bond buying program. The Reserve Bank of Australia, meanwhile, held its policy rate steady at 4.35%.
Neither the Japanese yen nor the Australian dollar experienced sharp initial reactions to these monetary policy decisions. Investors are now awaiting press conferences from central bank officials in Sydney and Tokyo, anticipating hawkish outlooks. Markets have priced in another rate hike in Japan this year and a 65% chance of a further hike in Australia.
The Bank of Japan's rate hike brings policy to the estimated neutral rate for the economy. The central bank will reduce its bond buying by approximately 200 billion yen ($1.25 billion) per quarter until April 2027, after which JGB buying will stabilize at around 2 trillion yen monthly.
Elsewhere, oil prices held above $80 a barrel, with traders hesitant to push markets higher following a tentative peace agreement between the U.S. and Iran. Details of the deal remain scarce, and shippers estimate it could take weeks to restore confidence for safe passage through the Strait of Hormuz.
SoftBank shares were stable after reports indicated the chief financial officer of its Vision Fund investment arm is departing after a decade. Chinese economic data for May was mixed, with retail sales falling for the first time in over three years, impacting market sentiment and leading to stock declines in Hong Kong.
Overnight, Wall Street recorded gains. In after-hours trading, SpaceX's market value surpassed $2.6 trillion as its stock rallied approximately 48% above its listing price. Nvidia also made a significant move by issuing a $25 billion bond, which it stated would be used for refinancing and general corporate purposes.