Asian stocks fluctuated before more hints on rates

While Japanese markets plummeted significantly as high wage data stoked expectations of tighter monetary policy, Asian equities were flat on Wednesday as caution before additional clues on interest rates kept investors away.

Following modest advances overnight, regional equities saw some momentum on Wall Street as expectations on potential Federal Reserve interest rate reduction were bolstered by a plethora of dismal U.S. economic data.

In Asian trade, U.S. market futures saw a little increase, but attention was still mostly on this week's nonfarm payrolls report.

The average cash wages in Japan increased far more than anticipated in April, according to statistics, which caused both the Nikkei 225 and TOPIX to decline.

When the salary increases that the Japanese unions had secured earlier this year started to take effect, the overall wage income of employees also increased.

Increased inflation is predicted by the Bank of Japan in the upcoming months, which is likely to provide more pressure on the central bank to tighten policy. This is correlated with stronger earnings.

In order to do this, during a meeting the following week, the BOJ is anticipated to start reducing its stimulus bond purchases. However, there are greater obstacles for local stocks because of the tougher Japanese monetary policy.

Despite the fact that the economy expanded less than anticipated in the first quarter of 2018, Australia's ASX 200 index increased due to pressure from high interest rates and inflation.

However, the result raised predictions that the Reserve Bank of Australia would have less leeway to hike interest rates in the event of a weakening economy.

RBA Governor Michele Bullock cautioned on Wednesday, nevertheless, that this year's rate rises may still be necessary due to persistent inflation.

The Nifty 50 index for India suggested a bleak opening as both the Nifty and the BSE Sensex 30 fell by around 6% on Tuesday.

The primary cause of the losses in Indian equities was the preliminary results of the vote counting, which revealed that the opposition Indian National Congress was gaining momentum and the ruling BJP party had received a much smaller number of seats in the lower chamber of parliament.

The results were unexpected in terms of the market's expectations for a BJP sweep. They were verified after the market closed.

(Sources: investing.com, reuters.com)