Nikkei slips from record high, JGBs wobble on BOJ’s hawkish hold

[TOKYO] Japan’s Nikkei share average slipped from a record high, government bonds swung, and the yen rallied on Tuesday, after the central bank struck a hawkish tone as it kept interest rates unchanged.

The benchmark Nikkei 225 Index fell 0.8 per cent to 60,072.43 as the market reopened after a break to react to the Bank of Japan’s decision. The broader Topix climbed 0.78 per cent to 3,764.51.

The yield on the benchmark 10-year Japanese government bond rose to as high as 2.48 per cent, near a 29-year peak of 2.49 per cent touched earlier this month, before easing back to 2.465 per cent. The yen strengthened 0.2 per cent to 159.02.

The BOJ held its policy rate steady, but three of the nine board members proposed hiking borrowing costs, signalling the bank’s concern about inflationary pressures stemming from the conflict in the Middle East.

“The outcome of the BOJ policy meeting was a bit hawkish, with three board members dissenting from the decision, not two. That weighed on investor sentiment as they braced for an interest rate hike in June,” Kazuaki Shimada, chief strategist at Iwaicosmo Securities, said.

“But the Nikkei’s decline today was driven by Advantest and SoftBank Group. Given their fast-pitched rally in the recent sessions, the Nikkei’s decline after the BOJ’s decision is an appropriate adjustment to the sharp gains of the index.” REUTERS