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TOKYO (Reuters) — Japan’s Nikkei share average ended at more than a week low on Monday, with exporters feeling the pressure from a stronger yen as investors bet the Bank of Japan could be forced to tweak stimulus settings again as soon as this week.
The Nikkei .N225 fell 1.14% to close at 25,822.32, its lowest close since Jan. 5. The broader Topix .TOPX lost 0.88% to 1,886.31.
The yen reached its strongest since May at 127.215 per dollar JPY=EBS with speculators ramping up wagers that the BOJ’s yield curve controls are becoming untenable amid rising inflationary pressure.
The central bank sets policy on Wednesday, after shocking markets last month by doubling the band that it lets the 10-year Japanese government bond yield move around zero, to a range of -0.5% to 0.5%.
The benchmark yield JP10YTN=JBTC exceeded that target for a second day on Monday, reaching 0.51%.
We tend to think that the market reactions have been a bit excessive, said Yunosuke Ikeda, chief equity strategist at Nomura.
Buying of banks and selling of Nikkei 225 futures was based on rapid normalization (of policy) by the BOJ, which is unlikely to happen.
Ikeda expects some reversal of recent moves after Wednesday’s BOJ decision, and forecasts the Nikkei to be at 26,500 by end-March.
Bank stocks already saw investors taking money off the table on Monday after last week’s surge to a five-year high. Banking .IBNKS.T was the worst performer among the Tokyo Stock Exchange’s 33 industry groups, dropping 2.94%.
Automakers were weak, with Nissan 7201.T sliding 1.69% and Suzuki 7269.T dropping 1.63%.
Uniqlo store operator Fast Retailing 9983.T lost 1.96%
Nintendo 7974.T, though, bounced 0.3%, but after dropping to a nearly one-year trough at the start of the session.
Chemical company Denka 4061.T was Nikkei’s biggest decliner by far, plunging 15.92% after cutting earnings forecasts.
Drugmaker Eisai 4523.T added 2.06% after it announced it had submitted a marketing authorisation application in Japan for its Alzheimer’s drug lecanemab.
