Japan shares edge up in cautious trade as central bank meetings loom

TOKYO: Japanese stocks edged a tick higher on Wednesday as investors bought individual shares with bright earnings prospects, though the overall mood was cautious in the run-up to key meetings by the US Federal Reserve and the Bank of Japan.

The Nikkei 225 Index edged up 0.16% to 29,968.06 by 0215 GMT, while the broader Topix rose 0.03% to 1,982.11.

Sentiment for Japanese equities remained fairly positive due to a healthy outlook for the global economy and progress in COVID-19 vaccine rollouts, analysts said.

Japanese stocks are, however, likely to move in a narrow range for the remainder of the month as investors retreat to the sidelines with the fiscal year ending on March 31.

The focus shifts to a Fed meeting ending later in the day, where some US policymakers may bring forward their expectations for rate hikes due to an improving economy.

Investors also keenly await the outcome of a BOJ meeting that is expected to end later in the week. Japan's central bank could abandon a numerical target for exchange-traded fund (ETFs) purchases, but analysts say the stock market is strong enough to continue rising if that did happen.

"If there is any disappointment in reaction to the BOJ, it won't last long," said Takashi Hiroki, chief strategist at Monex Securities.

"Japanese stocks have proven that they don't need the BOJ to buy ETFs to rise sharply. Once we reach April a lot of new money will enter the stock market."

Stocks that gained the most among the top 30 core Topix names were Takeda Pharmaceutical Co Ltd up 2.12%, followed by Shin-Etsu Chemical Co Ltd gaining 1.79%.

Tokyo Electric Power fell 8.88% after Japan's atomic regulator found safety breaches at the company's Kashiwazaki Kariwa station.

Honda Motor Co fell 1.32% after the automaker said it will halt production at a majority of US and Canadian auto plants for a week due to supply-chain problems.