TOKYO: Japan’s Nikkei share average jumped on Wednesday to its highest close in a month after the Bank of Japan maintained its ultra-easy policy, with technology heavyweights leading the way.
The Bank of Japan maintained ultra-low interest rates, including its 0.5% cap for the 10-year bond yield, defying market expectations it would phase out its massive stimulus programme in the wake of rising inflationary pressures.
The Nikkei advanced 2.5% to 26,791.12, its highest close since Dec. 19, a day before the BOJ shocked the markets by doubling the band for the 10-year JGB yield. The index also posted its biggest daily gain since Nov. 11.
Higher yields since then had pushed the Nikkei index lower and helped the yen gain strength.
Investors had expected that the central bank would tweak its policy further and built short positions, said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.
“The Nikkei rose today as investors bought back shares to cover short positions, and also the yen weakened against the dollar,” said Kamada.
Japan’s Nikkei rebounds as yen strength eases ahead of BOJ rate decision
Uniqlo brand owner Fast Retailing rebounded from early losses to close 2.74% higher, lifting the Nikkei the most. Chip-making equipment maker Tokyo Electron also reversed course to rise 1.71%.
Takatoshi Itoshima, a strategist at Pictet Asset Management Japan, said the Nikkei’s gain would be limited going forward as speculation the BOJ would tweak its policy would remain.
“If the BOJ had tweaked its YCC (yield curve control) today, the Nikkei could have fallen below 25,000,” Itoshima said.
All 33 industry sub-indexes but one rose. The banking sector fell 0.19%.
Life insurer Dai-ichi Life Holdings lost 1.67% and was the worst performer on the Nikkei. Mitsubishi UFJ Financial Group Inc slipped 0.79%.
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