Japan’s Nikkei Stock Average Gains as BOJ Policy Decision Lacks Surprises (UPDATE 1)

Reuters

12:30 JST, July 31, 2025 (updated at 16:30JST)

TOKYO, July 31 (Reuters) – Japan’s Nikkei share average gained on Thursday as the Bank of Japan kept interest rates steady as was widely expected, while revising up inflation forecasts.

That signaled the central bank’s conviction that it can eventually resume hiking rates, although policymakers again sounded a cautious note on the economic outlook amid lingering uncertainties over global trade.

The Nikkei .N225 ended the day up 1% at 41,069.82, while the broader Topix .TOPX added 0.8%.

Ahead of the policy decision, traders had firmed up bets for the BOJ to resume raising rates from as early as October after Tokyo reached a long-awaited trade agreement with Washington earlier this month, removing a degree of uncertainty from the economic outlook.

In its quarterly outlook report, the BOJ said that while trade talks had seen progress, uncertainty surrounding each country’s negotiations and the economic and inflationary impact remain high.

“The BOJ continues to be cautious on global risks, especially the tariff policy from the United States,” said Tohru Sasaki, chief strategist at Fukuoka Financial Group.

“And actually, between Japan and the U.S., their understanding of the tariff agreement is totally different, so there’s still uncertainty.”

On the Nikkei, earnings were a big driver of stock moves on Thursday. Kyocera 6971.T jumped 9.5%, while Astellas Pharma 4503.T climbed 6.1%.

At the other end, Panasonic Holdings 6752.T slumped 3%.

Shares of companies that benefit from a drop in copper prices outperformed, with Fujikura 5803.T rallying 6.6% and Furukawa Electric 5801.T rising 5.8%.