TOKYO: Japan’s Nikkei share average erased early losses to trade marginally higher on Friday, as comments from Bank of Japan Governor Kazuo Ueda eased worries that the central bank may be considering a more aggressive rate hike stance.
The Nikkei was up 0.11% at 38,719.34 by the midday break after falling as much as 0.6% on a stronger yen and worries about US tariffs.
The broader Topix was flat at 2,734.97. Ueda said the central bank stands ready to increase government bond buying if long-term interest rates rise sharply.
“Investors were excessively cautious about the BOJ’s monetary policy. But the market was relieved that the central bank was not as hawkish as they had thought,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory.
Rising inflation has driven expectations that the BOJ will keep raising interest rates higher and faster, pushing yields on Japanese government bonds (JGBs) to more than decade-high levels this week.
Ueda’s comments came after data showed Japan’s core consumer inflation, a key gauge for policy, hit 3.2% in January, its fastest pace in 19 months.
The yen rose to a 2-1/2 month high on Friday on the back of a jump in Japanese inflation.
“The yen’s strength has discouraged investors from buying stocks today because the currency might move during the nation’s three-day weekend,” said Yugo Tsuboi, chief strategist at Daiwa Securities.
Japanese market will be closed on Monday for a public holiday.
Japan’s Nikkei gains as investors pick up banks and defence shares
Concerns about the potential impact of US President Donald Trump’s tariff threats also capped further gains on the Nikkei, strategists said.
Trump has slapped an additional 10% tariff on Chinese goods and announced plans to reimpose steel and aluminium levies from his first term, but suspended threatened tariffs on Canada and Mexico while numerous others remain - as of yet - only threats.
Drug maker Chugai Pharmaceutical rose 3.55% to become the biggest boost for the Nikkei. Chip-making equipment maker Tokyo Electron rose 0.54%.
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