Tokyo Stocks Expected to Be Sensitive after BOJ Meeting This Week

Jiji Press

9:55 JST, January 15, 2023

TOKYO (Jiji Press) — Tokyo stocks are expected to be sensitive to the outcome of the Bank of Japan’s policy-setting meeting this week, market sources said Friday.

Last week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s Prime section gained 145.67 points, or 0.56%, to end at 26,119.52 on Friday.

The Tokyo market extended its winning streak to five sessions through Thursday, aided by hopes for slowing inflation in the United States, but suffered a setback on Friday, with investors increasingly wary of a possible further policy revision by the BOJ.

This week, the biggest event will be the BOJ’s two-day policy meeting through Wednesday, while the Nikkei average is expected to move mainly between 25,500 and 26,600, analysts and brokers said.

“The market may become volatile early next week amid speculation about the BOJ’s policy decision,” said Kazuo Kamitani, strategist at Nomura Securities Co.

If the BOJ comes up with a fresh policy revision or any other surprising steps at the policy meeting, the market “could face turmoil,” Kamitani said, adding that the market would otherwise move on a firm note after the meeting amid a sense of relief. On Dec. 20, the BOJ surprised the market by announcing a revision to its yield curve control regime, prompting the Nikkei average to lose nearly 700 points.

Following the upcoming policy meeting, the Nikkei average may fall to 25,500, said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

“The market would be hit by hefty selling if any BOJ policy revision leads to a sharp rise for the yen against the dollar and U.S. equities plunge at the same time,” Miura said.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., suggested that the BOJ is “highly unlikely” to revise its policy again, less than a month after the previous policy tweak.