Japan’s Nikkei Soars after BOJ Policy Tweak; Toyota Jumps

Reuters

18:39 JST, November 1, 2023

TOKYO (Reuters) — Japan’s Nikkei share average posted its biggest rise in three weeks on Wednesday, as investors scooped up stocks amid relief that the Bank of Japan (BOJ) had refrained from major changes to stimulus settings a day earlier.

Heavyweight automaker Toyota Motor gave additional momentum with a 4.71% gain after announcing strong earnings and a 100-billion-yen ($660.81 million) buyback during the afternoon session.

The Nikkei finished up 2.41% at the day’s high of 31,601.65, a two-week closing peak, for its biggest percentage gain since Oct. 10.

The broader Topix advanced 2.53%.

Investors who braced for a hawkish shift in the BOJ’s policy were relieved and bought back stocks to cover their short positions, said Shigetoshi Kamada, general manager of the research department at Tachibana Securities.

The BOJ said it would patiently maintain its ultra-loose policy, which is a sharp contrast to the U.S. Federal Reserve, which tries to contain inflation with monetary tightening.

The BOJ on Tuesday further loosened its grip on long-term interest rates by tweaking its bond yield control policy again, but it kept ultra-low interest rates steady.

An overnight strong finish on Wall Street and robust outlook for domestic corporates has also boosted risk appetite, strategists said.

All but one of the Tokyo Stock Exchange’s 33 industry sub-indexes rose, with the auto and autoparts sector jumping 4.68% to lead the gains.

Air transport  was the loser, down 1.19%. Japan Airlines retreated 2.75% after its earnings report underwhelmed.

The Nikkei’s worst performer in terms of both percentage and points decline was chip-testing equipment maker Advantest which tanked 5.9% after downgrading its full-year operating profit forecast.

Of the Nikkei’s 225 components, 204 rose while 20 fell. One ended flat.