Japan’s Nikkei hits record high, yen steady after BOJ hikes rates as expected

[TOKYO] Japan’s Nikkei share average rose to a record high on Tuesday (Jun 16) after the Bank of Japan (BOJ) raised interest rates, as had been widely expected, without signalling urgency for further tightening in monetary policy.

The yen maintained a slightly stronger tone against the US dollar and Japanese government bonds slipped after the decision.

The Nikkei gained 0.8 per cent to 69,871.13 as of 0340 GMT, 10 minutes after reopening from the midday recess, touching 69,916.34 for the first time ever.

The broader Topix flipped from morning losses to edge up 0.2 per cent at 4,007.36.

The BOJ’s decision came during the trading break for stocks and bonds and had little initial effect on the yen, which remained around 0.1 per cent firmer at 160.215 per US dollar. However, that was still on the weaker side of the 160-per-US dollar level considered a line in the sand for intervention by Japanese officials.

“The BOJ delivered what markets expected,” said Charu Chanana, chief investment strategist at Saxo. “But the reaction shows this was not hawkish enough to force a major yen repricing.”

The central bank “is still moving in a very gradual way and continues to say financial conditions will remain accommodative”, she added. “This is mildly supportive for Japanese equities because the BOJ is tightening, but not in a way that threatens liquidity or earnings.”

Benchmark 10-year JGB futures lost 0.28 yen to 127.98 yen. The yield on the 10-year cash bond was five basis points higher at 2.625 per cent. Yields rise when bond prices fall.

Of the Nikkei’s 225 components, 83 rose versus 142 that fell, with some heavily weighted AI stocks having an outsized impact in buoying the market.

SEE ALSO

Bank of Japan raises interest rates to 31-year high in widely expected move

Japan’s Nikkei jumps past 65,000 mark for first time on Iran talks optimism

Chip-testing machinery makers outperformed, with Advantest gaining 5.1 per cent, as did data centre plays, with Fujikura and Furukawa Electric up 9.9 per cent and 7.5 per cent, respectively. REUTERS