Japan’s Nikkei Hits 8-Month High After BOJ Keeps Stimulus

Yomiuri Shimbun file photo
Tokyo Stock Exchange

TOKYO (Reuters) — Japan’s Nikkei share average rose to an eight-month high on Friday after the Bank of Japan left its ultra-easy monetary policy settings unchanged, adding to the boost from a series of strong domestic earnings.

The Nikkei surged as high as 28,879.24 for the first time since Aug. 19, and closed near that level at 28,856.44, a gain of 1.4%.

The broader Topix ended 1.23% higher at 2,057.48, the strongest level since March 9.

The yen slumped as much as 0.83% to just past 135 per dollar , giving support to Japanese exporters’ shares, particularly automakers.

Bank stocks, though, were a casualty of the BOJ decision, flipping from gains of as much as 2.64% in the morning to losses as steep as 2.41% on the idea that low rates will continue to crush lending profits for the foreseeable future.

As widely expected, the BOJ kept its short-term interest rate target intact at -0.1% and for the 10-year bond yield around 0%, vowing to “patiently” continue with stimulus.

It announced a “broad-perspective” review of its monetary policy, but lasting as long as 1-1/2 years, indicating no rush to normalize settings.

“The main message is that, of course, the BOJ will consider a change in monetary policy, but it will take a longer time,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

“That has created some volatility in financial markets.”

The banking index was the worst performer among the Tokyo Stock Exchange’s 33 industry groups, although losses had eased greatly to just 0.28% by the close.

Transport equipment makers rallied 2.19%.

Advancers far exceeded decliners on the Nikkei, with 205 of the 225 components rising versus 20 that fell.

The standout winners were the result of strong earnings, with shipbuilder Mitsui E&S Co Ltd soaring 15.85%, sauce maker Kikkoman Corp jumping 11.84% and Kansai Electric Power Co Inc advancing 9.62%.