Japan’s Nikkei Stock Average Tracks Wall Street Higher as BOJ Decision Looms

Reuters

12:22 JST, January 24, 2025

TOKYO (Reuters) – Japan’s Nikkei share average rose on Friday, buoyed by a record close for U.S. stocks overnight, even as an expected interest rate hike by the Bank of Japan loomed later in the day.

The Nikkei .N225 added 0.6% to reach 40,192.85 as of the midday recess, with 191 of the index’s 225 components rising, versus 34 that fell.

The broader Topix .TOPX advanced 0.6%.

On Thursday, the U.S. S&P 500 climbed 0.5% to mark its first closing record since Dec. 6.

BOJ officials, including Governor Kazuo Ueda, have clearly signaled that policy tightening is on the table at the current meeting and analysts and investors consider the calm in markets following the inauguration of U.S. President Donald Trump as a green light for a quarter-point hike.

There is no set time for the BOJ’s policy announcement, but it tends to come during the midday trading break or shortly after markets reopen.

“The BOJ has gone to pains to guide the market towards this hike,” said Kyle Rodda, senior financial market analyst at Capital.com.

“It’s very unlikely the BOJ would pull the rug from underneath the market, considering all the conditions have been met for the central bank to hike.”

Data on Friday showed Japan’s core consumer prices rose 3% last month, the fastest pace in 16 months and well above the BOJ’s 2% target.

Assuming the BOJ raises the policy rate to 0.5%, as is widely expected, the focus will fall on what Governor Ueda says in his news conference in terms of the pace of further tightening. The market has currently priced for one further quarter-point increase by year-end.

Among individual stocks, the kickoff of earnings season on Thursday resulted in some clear losers in the current session.

Chip-testing equipment manufacturer Disco Corp 6146.T slid more than 6%, the most on the Nikkei. Motor maker Nidec 6594.T dropped 2.6%.

Mitsubishi Motors 7211.T was another stand-out underperformer, slumping 3.9%, after Reuters and other media reported the Nissan 7201.T partner was considering not joining a planned business merger between Nissan and Honda 7267.T.