Japanese stocks jumped as the yen sank after the Bank of Japan maintained its key interest rate and yield curve control policy.
(Bloomberg) — Japanese stocks jumped as the yen sank after the Bank of Japan maintained its key interest rate and yield curve control policy.
The blue-chip Nikkei 225 Stock Average advanced 2.5%, the most since Nov. 11, while the broader Topix rose 1.7%. The yen weakened more than 2%, back through 130 per dollar.
The central bank shocked the market last month by widening the band on 10-year bond yields, sending stocks plunging. While most economists had expected the BOJ to stand pat in this week’s meeting, some market participants had wagered on a possible further widening of the yield band.
BOJ Pushes Back Against Market Speculation, Prompts Yen Slide
“While very few economists were predicting changes to monetary policy tools, some in the market obviously were,” said John Vail, chief global market strategist for Nikko Asset Management Co. in Tokyo.
Electronics makers were the biggest boost to the Topix on Wednesday, as a weaker yen boosts the profit outlook for exporters. Banks were the only declining group, paring recent big gains as hopes for an early end to negative interest rates dimmed.
Pressure has been mounting on the BOJ to shift away from its years of easy-money policy, especially as Governor Haruhiko Kuroda is due to step down in April. The top candidates to succeed him include current BOJ deputy governor, Masayoshi Amamiya, and a former one, Hiroshi Nakaso.
“Kuroda is now in ‘lame duck’ session, so markets are likely to focus primarily on who will be picked as successor,” said Nicholas Smith, a strategist at CLSA Securities Japan Co. “That’s an issue about which we have disturbingly little guidance, so expect volatility.”
Japanese stocks have underperformed this year since the central bank’s surprise in December. The benchmark Topix is up 2.3% so far in 2023 compared with gains of about 4% in the S&P 500 Index and 5% in the MSCI World Index.
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