• MSCI’s broadest index of Asian shares outside Japan fell 0.13 percent.
• Japan’s Nikkei opened 0.5% lower, while Australia’s S&P/ASX 200 traded 0.43% lower.
• The yen fell against the dollar, while the euro and the dollar rose against other major currencies.

Wednesday Asian shares were muted, while the dollar held steady, as investors sought direction after China made additional moves toward reopening its Covid-ravaged economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.13 percent, halting a two-day gain streak and pointing to a red December.

Japan’s Nikkei (.N225) opened 0.5% lower, while Australia’s S&P/ASX 200 (.AXJO) opened 0.43 percent lower.

China equities (.SSEC) were expected to open marginally down, while Hong Kong stocks (.HSI) were expected to open 1% higher, boosted by China’s declaration on Monday that it will no longer require entering travellers to undergo quarantine beginning on January 8.

The likelihood of a rapid economic rebound has been bolstered by a faster-than-anticipated outbreak peak.

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Overnight, Wall Street ended down as U.S. Treasury yields weighed on growth stocks sensitive to interest rates.

Investors have been attempting to predict how high the Federal Reserve will need to hike interest rates as it tightens policy in its ongoing fight against inflation while attempting to prevent a recession.

The yield on 10-year Treasury notes declined by 0.9 basis points to 3.849%, remaining near the five-week high of 3.862% reached in the prior session.

The yield on the 30-year Treasury bond decreased by 2.3 basis points to 3.920%, and the yield on the two-year Treasury bond, which normally swings in tandem with interest rate forecasts, decreased by 1.9 basis points to 4.349%.

Wednesday’s release of a summary of the December meeting of the Bank of Japan’s policymakers revealed that they discussed the increasing likelihood that increased wages will eliminate the risk of a return to deflation.

At its meeting on the 19th and 20th of December, the BOJ maintained its ultra-easy monetary policy but startled investors with a change to its bond yield control strategy, enabling long-term interest rates to climb further.

The emphasis of investors will likely be on who will run the BOJ after Governor Haruhiko Kuroda steps away in April, despite growing market expectations that the Japanese central bank may change its policies.

“We think once the new governor is appointed, then the policy review will follow in the second quarter of 2023,” said ING analyst Min Joo Kang. She stated that another adjustment to the yield curve management strategy was probable in the first half of 2023 and that ING anticipated a rate increase in late 2023 or early 2024.

“The spring salary negotiation next year is the most important to watch for further meaningful policy change for the Bank of Japan.”

On the currency market, the Japanese yen fell 0.25 percent against the dollar to 133.80 per dollar, while the euro fell 0.08 percent to $1.063.

The dollar index, which gauges the value of the safe-haven greenback relative to six major currencies, increased by 0.077%.

U.S. crude increased 0.29% to $79.76 per barrel, while Brent rose 0.35% to $84.64 per barrel.

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