Japan’s Nikkei Ends Lower on Tepid Wall Street, BOJ Policy Uncertainty (Update 1)

Reuters

12:31 JST, May 17, 2024 (updated at 16:10 JST)

TOKYO, May 17 (Reuters) – Japan’s Nikkei share average snapped a three-day winning streak to end lower on Friday, tracking Wall Street’s lackluster overnight finish, while uncertainties over the Bank of Japan’s policy trajectory also weighed on sentiment.

The Nikkei slipped 0.34% to close at 38,787.38, but gained 1.43% for the week.

The index recouped some losses after the BOJ maintained the amount for its regular bond-buying operation.

The central bank on Monday abruptly reduced the amount for bonds with 5-10 years left to maturity, raising speculations that it would continue its hawkish move.

The market eyed the BOJ operation today because that was part of the gauge for its policy path, said Yugo Tsuboi, chief strategist at Daiwa Securities.

The broader Topix recouped early losses to end 0.3% higher at 2,745.62 and posted a 0.64% weekly gain.

Investors continue to scoop up cheap stocks as they see the market rising further towards the end of this year, said Jun Morita, general manager of the research department at Chibagin Asset Management.

On Thursday, U.S. stocks closed lower after the Dow reached an intraday high of 40,000 for the first time, as investors continued to recalibrate their rate-cut expectations following data showing a slowdown in inflation. The Philadelphia SE Semiconductor Index lost 0.55%.

In Japan, chip-related shares fell on Friday, with Tokyo Electron losing 2.01% to become the biggest drag on the Nikkei. Silicon-wafter maker Shin-Etsu Chemical fell 1.52%.

Toyota Motor rose 2.51% to become the biggest boost for the Topix. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group gained 2.04% and 3.44%, respectively.

The banking sector rose nearly 2% to become the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.