Japan's Nikkei closes at over 5-month high after BOJ gives no hint of policy shift

JAPAN’S Nikkei closed at a more than five-month high on Wednesday (Dec 20) as caution on the Bank of Japan’s (BOJ) policy stance faded after the central bank offered no hints on when it would exit its negative rate policy.

The Nikkei rose 1.16 per cent to end at 33,675.94, its highest close since July 3. The broader Topix rose 0.67 per cent to 2,349.38

“There was no sign from the BOJ Governor Kazuo Ueda on the timing of the exit from the bank’s negative rate policy,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Research Institute.

“Speculation on the BOJ’s policy shift has been weighing on the Japanese market, and domestic equities underperformed US peers for that reason. Now this caution has dwindled.”

The BOJ maintained ultra-loose policy on Tuesday in a widely expected move, and made no change to its dovish policy guidance.

The Nikkei rallied since investors who had bet on equities declining prior to the BOJ decision bought shares back, said Shuji Hosoi, a senior strategist at Daiwa Securities.

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The index trimmed gains in the afternoon session, as investors wanted to see if Wall Street would keep up its momentum later in the day, Hosoi said.

Wall Street extended its rally on Tuesday as last week’s dovish policy pivot from the Federal Reserve continued to reverberate and the yen tumbled as the BOJ also made no change to its dovish policy guidance.

Uniqlo-brand clothing shop operator Fast Retailing rose 3.92 per cent to give the biggest boost to the Nikkei. Silicon wafer maker Shin-Etsu Chemical jumped 4.08 per cent and air-conditioner maker Daikin Industries rose 3.1 per cent.

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Japan government bond yields fall after BOJ keeps policy unchanged

Toppan Holdings jumped 8.45 per cent to become the top percentage gainer on the Nikkei after Daiwa Securities raised its rating for the printing firm to “outperform”.

Shipping rose 3.16 per cent to become the top gainer among 33 industry sub-indexes on the Tokyo Stock Exchange. REUTERS