Japan Nikkei ends lower after BOJ policy shift

Japan share market finished lower for fifth straight session on Wednesday, 21 December 2022, as risk sentiments remained downbeat after the Bank of Japan adjusted its yield curve control tolerance.

At closing bell, the 225-issue Nikkei Stock Average index declined by 180.31 points, or 0.68%, to 26,387.72. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 12.27 points, or 0.64%, to 1,893.32.

Total 27 of 33 sectors closed down along with the Topix index. Transportation Equipment was worst performing sector, declining 2.36%, followed by Real Estate (down 2.1%), Electric Appliances (down 1.7%), Glass & Ceramics Products (down 1.5%), and Metal Products (down 1.3%).

Shares of financial institutions and banks rose for a second day on expectations that they would benefit from the BoJ policy tweak. Mitsubishi UFJ Financial Group rose more than 8% while Sumitomo Mitsui Financial Group and Mizuho Financial Group both gained more than 4%.

The yield on 2-year Japanese government bonds briefly rose above zero for the first time since 2015 in Wednesday trade. The note gained 2.7 basis points to stand just below the flatline. The yield on the 10-year JGB jumped more than 3 basis points to stand at 0.451%, also reaching 2015 highs, while the yield on the 30-year JGB inched up 2 basis points to trade at 1.6%.

The Bank of Japan expanded the range of 10-year Japan government bond yield fluctuations from its current plus and minus 0.25 percentage points to plus and minus 0.5 percentage points. The adjustment is intended to improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions.

The impact of the BOJ's shift will likely ripple through global markets for the remainder of the year and into 2023. Japanese investors, who are among the biggest holders of Treasuries and major players in European debt, now have more incentive to bring money home.

CURRENCY NEWS: The Japanese yen stood at 131.72 against US dollar in Asian trade on Wednesday, 0.02% appreciated from yesterday's close of 131.70, after trading in the range between 131.52.36. The appreciation of yen came after the Bank of Japan modified its yield curve control tolerance range.

Powered by Capital Market - Live News