Japanese Shares Slip Ahead of BOJ Decision

The Nikkei 225 Index rose 0.9% to above 69,900 on Tuesday, reversing earlier losses and hitting fresh record levels after the Bank of Japan delivered a widely expected 25 basis point rate hike to 1%. The move signaled policymakers’ determination to address inflation pressures linked to the Iran conflict and support a persistently weak yen. However, some policymakers opposed the increase, with Toichiro Asada noting that downside risks to output and employment outweigh upside risks to inflation. Investors also monitored geopolitical developments amid expectations that the US and Iran will sign a peace agreement in Switzerland on Friday, a step that could lead to the reopening of the Strait of Hormuz. Technology shares led gains, with strong performances from Kioxia Holdings (4.4%), Taiyo Yuden (6.2%), Murata Manufacturing (5.9%), Advantest (3.1%), and Fujikura (8.8%).

The Nikkei 225 Index fell 0.15% to around 69,200, while the broader Topix Index slipped 0.4% to 3,983 on Tuesday, as Japanese equities pulled back from record highs ahead of the Bank of Japan’s policy decision. The central bank is widely expected to raise its benchmark interest rate by 25 basis points to 1% in an effort to contain inflation and support the yen. Investors also kept a close watch on geopolitical developments amid expectations that the US and Iran will sign a peace agreement in Switzerland on Friday, a move that could lead to the reopening of the Strait of Hormuz. Financial shares came under pressure, led by declines in Mitsubishi UFJ (-1.1%), Sumitomo Mitsui (-1.8%), and Mizuho Financial (-0.4%). Meanwhile, technology stocks were mostly higher, with strong gains from Kioxia Holdings (3.5%), Taiyo Yuden (3.3%), and Murata Manufacturing (7.2%).

The Nikkei 225 Index went up by 3136 points or 4.75 percent on Monday to close at 69156 points. The rise was led by Taiyo Yuden (23.08%), Sumco (17.68%) and Murata Manufacturing (17.58%).