Japan’s Nikkei futures rise on BOJ’s status quo

Japan’s Nikkei futures rose on Friday during the lunchbreak after the Bank of Japan left its ultra-easy policy settings unchanged, setting the index up for a 10th consecutive weekly gain.

The Nikkei share average fell 0.5% to 33,305 by the end of the morning session. Its weekly winning streak is the longest in 11 years and has carried the market more than 20% higher.

Nikkei futures lifted into positive territory after the BOJ decision was announced, during the market’s mid-session break.

The broader Topix also fell 0.5% in the morning, but is up 2.6% for the week. The BOJ kept policy unchanged and forecast inflation would slow down later in the year.

Tokyo stocks close lower after central bank moves

The yen weakened a little bit. The equity rally has been driven by the yen’s weakness, which flatters exporters’ profits, and money flow from foreign investors, who have been impressed by an official drive to improve Japanese corporate governance and balance sheets.

Canon Inc opened 4.5% higher, after the cameras-to-scanners conglomerate announced a stock buy back on Thursday in the latest such move. Shares of rival Olympus also rose 3.5%.

Travel and consumer stocks are also performing well.

Japan Airlines stock rose as much as 3% to a three-year high. Shares in cosmetics-maker Shiseido rose 2.7%.

Top losers included lens-maker Hoya Corp, falling 2.8% and Honda Motor, where profit-taking took the stock 2.4% lower and off recent 16-year peaks.

With the BOJ on hold, focus shifts back to economic data, inflation, and growing expectations of a policy tweak in July.

“The case for Japan remains the growing bottom-up evidence of a change in corporate governance, with the help of pressure from activists, combined with mounting evidence that inflation is back,” said Christopher Wood, global head of equities strategy at Jefferies.

“It remains a negative that the BOJ has not yet taken advantage of a relatively benign interlude (in the bond market) to initiate a further incremental normalisation of monetary policy.”