Nikkei Ekes Out Gain on Fading BOJ Hike Bets, Upbeat Wall Street

Reuters

16:43 JST, December 12, 2023

TOKYO (Reuters) – Japan’s Nikkei share average notched a modest gain on Tuesday amid waning expectations for an imminent move by the Bank of Japan at its policy meeting next week and Wall Street’s record closing for the year.

The Nikkei index finished the day up 0.16% at 32,843.70, marking its second consecutive day of gains. It had been up as much as 1.16% at the open, but steadily lost ground as the yen strengthened, hurting the earnings outlook for many exporters in the index.

The broader Topix index posted a 0.23% loss for the day, dragged by a higher proportion of finance shares amid concerns about prolonged low-interest rates.

“Particularly now bank stocks are weaker,” said Naka Matsuzawa, chief macro strategist at Nomura.

“The yen stopped weakening, and that’s also a profit-taking point for exporter stocks.”

The Topix value share index sank 0.48%, while the growth share index G was flat. The Topix banking index slid 1.5%.

Speculation swirled after markets interpreted comments by BOJ Governor Kazuo Ueda that the central bank will face an “even more challenging” situation in the year-end and start of next year as somewhat hawkish, boosting the yen and financial shares last week.

A Bloomberg report on Monday said BOJ officials see little urgency in scrapping negative interest rates this month amid lack of sufficient evidence of wage growth to justify sustainable inflation, citing sources.

The heavyweight chip companies kept the Nikkei in positive territory, despite 137 of its 225 components falling, versus 86 that rose, with two flat.

High-tech stocks got a boost from the strong performance of U.S. peers overnight, pushing technology to the top of the Nikkei index.

Chip-making equipment giant Tokyo Electron was the Nikkei’s biggest support, contributing 34 points with a 1.48% rise. Chip maker Renesas Electronics was the index’s biggest percentage gainer, jumping 4.37%.