Japan’s benchmark Nikkei stock index closed higher Friday, as with some solid domestic earnings, the Bank of Japan staying pat on its ultra-easy policy was well received.
The 225-issue Nikkei Stock Average gained 398.76 points, or 1.40 percent, from Thursday to close the day at 28,856.44, marking its highest closing level since Aug. 19, 2022.
The broader Topix index, meanwhile, gained 24.97 points, or 1.23 percent, to finish at 2,057.48.
Dealers here highlighted the BOJ at the conclusion of its two-day policy-setting meeting on Friday opted to set short-term interest rates at minus 0.1 percent while guiding 10-year Japanese government bond yields to around zero percent, under its yield curve control program, in a widely expected move.
They added however the central bank saying that Japan’s core consumer prices in fiscal 2025 are now forecast to rise 1.6 percent from a year earlier, led to the yen’s retreat against its counterparts, as the bank is struggling to reach its long-held 2 percent inflation target in a stable manner.
“The core consumer price outlook was weaker than the market consensus, leading to yen selling. It seems difficult to find a way to end the ultra-loose policy,” Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities Co. was quoted as saying.
Japan’s central bank also said it will conduct a review of its monetary policy framework over the past decades from a “broad perspective” and it will spend the next year or so on completing the assessment.
From this perspective, some analysts said that it could be inferred the Japanese central bank was in no hurry to shift from its ultra-loose policy to lift its interest rates in line with its global peers.
They said the BOJ, under new chief new governor Kazuo Ueda, has maintained that the current inflationary pressure hammering the economy is transitory.
“The main message is that, of course, the BOJ will consider a change in monetary policy, but it will take a longer time. That has created some volatility in financial markets,” Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management, was quoted as saying.
But the yen’s retreat was a boon for exporters who rely on a weaker yen to boost profits.
Export and technology issues finding favor on the yen’s decline included automakers Toyota Motor and Nissan Motor accelerating 1.8 and 2.4 percent, respectively.
Technology startup investor and Nikkei heavyweight Softbank Group climbed 3.0 percent, helping buoy the broader market, while consumer electronics giant Sony Group added 2.1 percent.
By the close of play, electric power and gas, machinery, and transportation equipment-oriented issues comprised those that gained the most.
The turnover on the Prime Market on the final trading day of the week came to 3,775.14 billion yen (27.82 billion U.S. dollars).
