Japan’s Nikkei Stock Average Ends Higher after BOJ Chief’s Comments Ease Rate Hike Concerns (Update 1)

Reuters

12:09 JST, February 21, 2025 (updated at 16:55 JST, Feb. 21)

TOKYO (Reuters) – Japan’s Nikkei share average reversed losses to end higher on Friday, as comments from Bank of Japan Governor Kazuo Ueda eased worries that the central bank may raise interest rates aggressively.

The Nikkei .N225 settled 0.26% higher at 38,776.94, after falling as much as 0.6% earlier in the session on a stronger yen and worries about U.S. tariffs. The index lost 1.2% for the week.

The broader Topix .TOPX inched up 0.07% to 2,736.53.

Ueda said the central bank stands ready to increase government bond buying if long-term interest rates rise sharply.

“Ueda’s comments pushed yields on Japanese government bonds lower, which weakened the yen. That lifted demand for Japanese equities,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Rising inflation has driven expectations that the BOJ will keep raising interest rates higher and faster, pushing yields on Japanese government bonds (JGBs) to more than decade-high levels this week.

Ueda’s comments came after data showed Japan’s core consumer inflation, a key gauge for policy, hit 3.2% in January, its fastest pace in 19 months.

The yen retreated from a 2-1/2 month high hit after a jump in Japanese inflation on Ueda’s comments, while JGB yields retreated from their more-than-a-decade highs.

The market was discouraged from active buying because the currency might move during the three-day weekend, said Yugo Tsuboi, chief strategist at Daiwa Securities.

Drug maker Chugai Pharmaceutical 4519.T jumped 4.47% to become the biggest boost for the Nikkei. Chip-making equipment maker Tokyo Electron 8035.T rose 1%.

Uniqlo-brand owner Fast Retailing 9983.T fell 1.16% to drag the Nikkei the most.

Of more than 1,600 shares trading on the Tokyo Stock Exchange’s prime market, 33% rose and 62% fell, with 3% trading flat.