Asia-Pacific shares slip on tech weakness before Friday's Bank of Japan decision

Traders expect Tokyo to hold at 1.25% this month, so the market's attention has moved to what the central bank signals about December.

Asia-Pacific equities are under pressure from a weak technology sector, leaving investors with a second problem to price before the Bank of Japan announces its decision on Friday, at the end of a two-day meeting.

The central bank is not expected to move. Bloomberg reported that cooling producer prices have fuelled bets on a skipped hike, and the policy rate stands at 1.25% after a quarter-point rise on September 17, which followed a June increase. The debate is about what comes next. Japan's September core consumer prices rose 2.1% year on year, in line with forecasts and up from 1.7% in August, while Tokyo core-core inflation, which strips out fresh food and energy, hit 3.0% against a consensus of 2.5%. Yields on Japanese government bonds have already drifted higher as investors position for confirmation that December hikes are the likely path.

The governor's language supports that positioning without committing him. Kazuo Ueda has said the bank can act again without a long wait, and that anchoring inflation near 2% is becoming more important. He has also warned that large or repeated hikes risk overshooting. Another official, Koeda, said rate adjustments should be timely as price risks tilt higher. The bank itself says rates remain far from neutral.

Finance Minister Katayama has said Prime Minister Takaichi respects the bank's independence and is ready to act on the yen, and that Takaichi told Donald Trump an undervalued yen is problematic.

For investors the difficulty is attribution. A soft tech tape in Asia often spills into US futures because of the overlap in megacap holdings, and that pressure compounds whatever follows the Bank of Japan announcement. Month-end rebalancing adds noise to both, so any US weakness will be hard to pin on the tech pullback, the central bank or portfolio flows.