Japan's Nikkei climbs as BOJ signals longer road to rate hikes
TOKYO: Japan's Nikkei share average rose on Thursday, extending early gains after the Bank of Japan slashed growth and inflation forecasts in a sign it would take longer than previously expected to raise interest rates again.
The Nikkei ended the day up 1.1% at 36,452.30. The BOJ's policy announcement came during the midday trading recess.
The broader Topix added 0.5%.
The BOJ cited uncertainties stemming from U.S. President Donald Trump's aggressive and erratic trade policies in more than halving its growth forecast for the current fiscal year to 0.5%, and projected underlying inflation to take about an additional year to be consistent with its policy target.
The central bank kept the benchmark rate at 0.5%, as widely expected.
'Without a significant easing of U.S. tariff policy, we expect the BOJ will maintain the current policy rate this year and in 2026, before raising the policy rate to 0.75% only in 2027,' said Norihiro Yamaguchi, an economist at Oxford Economics.
Later on Thursday, Japan's chief negotiator, economy minister Ryosei Akazawa, is due to hold his second round of talks on a tariff deal in Washington.
Japan's Nikkei rises on trade talk hopes; set for first monthly gain in four
U.S. President Donald Trump said on Wednesday that deals with Japan, South Korea and India might be close.
'Any progress in these negotiations, and although it will be little by little, we should see calm return to Japanese equities, and the Nikkei could recover to the 37,000 level,' said Wataru Akiyama, a strategist at Nomura Securities.
Notably, shipping shares as a group were the worst performers among the Tokyo Stock Exchange's 33 industry groupings, dropping 1.8% amid ongoing global trade uncertainty.
The tech-heavy Nikkei outperformed as semiconductor-related shares added to gains throughout the day.
Chip-testing equipment maker Advantest jumped 6.9% and was the Nikkei's biggest gainer in index-point terms, as it tracked after-hours advances for U.S. tech megacaps Meta Platforms and Microsoft on strong financial results.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 hours ago
- Business Recorder
UK stocks fall as Middle East conflict hits risk appetite
British equities ended lower in a broad-based selloff on Tuesday, with hostilities between Iran and Israel weighing on market sentiment and focus on a slate of rate decisions from central banks including the Bank of England this week. The blue-chip FTSE 100 index closed 0.4% lower, with more than 70% of its components clocking losses - though the index was still just a whisker away from its all-time highs. As the Israel-Iran conflict entered its fifth day, U.S. President Donald Trump indicated he may send senior American officials to meet with the Islamic Republic. Trump also left early from the Group of Seven summit in Canada, where he signed a trade deal with British Prime Minister Keir Starmer. Heavyweight banks bore the brunt of the selling pressure, with top lenders HSBC, Standard Chartered and Barclays each down more than 1%. Travel and leisure stocks also saw heavy selling with airline operators Wizz Air and British Airways owner IAG down 7.5% and 4.4%, respectively. Heavyweight energy gained 1.5% with oil prices ticking higher due to tensions in the Middle East. BP and Shell added more than 1% each as the top gainers on the blue-chip. FTSE 100 pulls back from record as ME tensions escalate Looking ahead, the spotlight this week will be on central bank meetings, with the Bank of England set to meet on Thursday and the U.S. Federal Reserve's verdict on Wednesday. Both are expected to keep rates steady. 'The key takeaway from Thursday won't be the rate decision, but rather what clues the tenor of the accompanying statement gives as to when rates might be cut again,' Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, said. 'The next meeting concludes on 7th August; assuming anticipated trends in inflation, wages and economic activity remain on track, a further 0.25% cut will be very much on the cards.' British midcaps fell 0.2%. A stand-out was construction company Morgan Sindall which jumped 14.6% after saying it expects annual pre-tax profit to be significantly ahead of previous expectations.
Business Recorder
5 hours ago
- Business Recorder
TSX flat as energy share gains counter other losses amid Mideast tensions
Canada's main stock index was flat on Tuesday, as gains in energy shares offset weakness in other sectors due to investor worries that the Iran-Israel conflict could spiral into broader regional unrest. The S&P/TSX composite index was down 0.04% at 26557.54 points. The commodity-heavy benchmark index had briefly hit a record high on Monday as investors hoped that the Middle East tensions would be contained. However, the hope was short-lived as the tensions showed no signs of easing. The conflict entered its fifth day on Tuesday, driving oil prices higher even though major oil and gas infrastructure and flows have so far been spared from substantial impact. 'If anything, it (the conflict) could lead oil prices higher, but both Canada and U.S. are big oil producers, so it might actually end up benefiting us in the long term,' said Jay Bala, co-founder and senior portfolio manager at AIP Asset Management. TSX hits new record high as investors shrug off Middle East concerns Energy stocks were leading the gains on TSX, tracking the rising crude prices. U.S. President Donald Trump said he wanted a 'real end' to the nuclear problem with Iran after departing early from the Group of Seven summit in Canada, while clarifying he was not leaving to work on a ceasefire. Investors also welcomed the possibility of Canada getting closer to a deal with the U.S. after Prime Minister Mark Carney said he and Trump had agreed that their nations should try to wrap up a new economic and security deal within 30 days. Information and technology stocks also rose 0.2%. On the flip side, industrials weighed most on TSX with a 0.6% decline. Healthcare sector was down over 1% with Tilray Brands dropping 6% to the bottom of the benchmark index.
Business Recorder
5 hours ago
- Business Recorder
Wall Street slips as Middle East conflict escalates
Wall Street's main indexes slipped on Tuesday as the Israel-Iran conflict entered its fifth day, denting global investor confidence ahead of the Federal Reserve's upcoming monetary policy decision. Iran and Israel's air war, which began on Friday when Israel attacked Iran's nuclear facilities, has raised concerns that the conflict could create bottlenecks for oil exports from the oil-rich Middle East. '(Wall Street believes) that the situation is going to be contained. The market is definitely paying attention to it, but right now there's no panic in the market over it,' said Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report. U.S. energy stocks rose as oil prices remained elevated on the uncertainty. Chevron was up 1.8% and Exxon advanced 1.7%. The surge in oil prices comes ahead of the Fed's monetary policy decision on Wednesday, when policymakers are widely expected to keep interest rates unchanged. Money market moves show traders are pricing in about 46 basis points of rate cuts by the end of 2025, with a 57% chance of a 25-bps rate cut in September, according to CME Group's FedWatch tool. At 10:05 a.m. ET the Dow Jones Industrial Average fell 109.04 points, or 0.26%, to 42,406.05, the S&P 500 lost 21.71 points, or 0.36%, to 6,011.40 and the Nasdaq Composite dropped 88.94 points, or 0.45%, to 19,612.28. Ten of the 11 major S&P 500 sub-sectors fell. Healthcare stocks dropped the most, with an about 0.8% decline. On the flip side, energy stocks gained 1.6%. Data on Tuesday showed U.S. retail sales dropped more than expected in May, while factory production barely rose last month. U.S. Senate Republicans late on Monday unveiled proposed changes to President Donald Trump's sweeping tax-cut bill that had cleared the House of Representatives in May. Solar stocks dipped after the Senate's changes to Trump's tax-cut bill revealed a phase-out of solar, wind and energy tax credits by 2028. Shares of Enphase Energy dropped 23.3% and Sunrun fell 39.4%. Invesco Solar ETF was down 8.8%. Shares of nuclear power companies rose after the Senate extended credits for nuclear energy to 2036. Oklo was up 3.3%, while Nano Nuclear Energy rose 4.3%. As investors flock to traditional safe-haven assets amid heightened geopolitical uncertainty, a rise in U.S. Treasuries pushed yields lower across the curve. Yields on the benchmark 10-year fell about 2 basis points to 4.43%. Most megacap and growth stocks fell. Tesla lost 1.9%, while Alphabet was down about 1%. Among other movers, Eli Lilly fell 1.1% after it agreed to acquire Verve Therapeutics for up to $1.3 billion. Shares of Verve surged 73.7%. T-Mobile fell 3.9% as Japan's SoftBank raised $4.8 billion from a sale of 21.5 million of the wireless carrier's shares at $224 each, according to a term sheet reviewed by Reuters. Declining issues outnumbered advancers by a 1.67-to-1 ratio on the NYSE and by a 1.75-to-1 ratio on the Nasdaq. The S&P 500 posted seven new 52-week highs and eight new lows, while the Nasdaq Composite recorded 31 new highs and 50 new lows.
