Asian markets: Shanghai Composite slips as Bank of Japan leaves interest rates unchanged

Asian stock markets were trading lower on 16 June, including the Shanghai Composite which was down 0.22% at 2,880.81 at 6.08am GMT. This followed Bank of Japan and US Federal Reserve's move of leaving interest rates unchanged.

While the decision of both banks was widely expected by analysts, investors in the region were disappointed that the Japanese central bank failed to announce further monetary stimulus. Chris Weston, chief market strategist at IG in Melbourne said, "The Bank of Japan are in a pickle and more than most will be really hoping that the UK don't vote to 'leave,' or USD/JPY will be trading below 100 yen and they will have to do something amazingly punchy just to stabilize assets."

"On the other hand, even if the UK votes to 'remain' and risk assets undergo some sort of relief rally, domestic inflation expectations shouldn't pick up greatly and they may need to ease in this scenario anyhow", Weston added.

With regards to US interest rates, the hawkish Fed had revealed a cautious note on its policy outlook. It said that Brexit fears were a factor in its decision to hold rates steady for the moment. However, it said that 2016 could still witness two rate increases.

However, Daisuke Uno, chief strategist at Sumitomo Mitsui Bank opined, "Although the Fed's projection tout two rate hikes, a rate hike in July is highly unlikely, which makes it questionable whether the Fed can raise rates twice in its three policy meetings left by the end of year."

Indices in the rest of Asia traded as follows on 16 June at 6.23am GMT:

Overnight (15 June), the Dow Jones Industrial Average closed at 17,640.17, down 0.20%, while the FTSE 100 closed at 5,966.80, up 0.73%.

Among commodities, oil prices too declined amid Brexit concerns. While WTI crude oil was trading 0.92% lower at $47.57 (£33.57, €42.14) a barrel, Brent crude was trading 0.82% lower at $48.57 a barrel at 6.31am GMT on 16 June.