Japan’s Nikkei share average recovered losses to finish higher on Friday, as comments from Bank of Japan Governor Kazuo Ueda allayed concerns that the central bank would hike interest rates rapidly. The Nikkei closed 0.26% higher at 38,776.94 after sliding as much as 0.6% earlier in the session due to a stronger yen and concerns over US tariffs. The index fell 1.2% during the week. The wider Topix rose 0.07% to 2,736.53.
Ueda stated that the central bank can expand government bond purchases if long-term interest rates climb considerably. “Ueda’s comments pushed Japanese government bond rates lower, weakening the yen. “That increased demand for Japanese stocks,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. Rising inflation has fueled anticipation that the BOJ would raise interest rates even quicker, pushing yields on Japanese government bonds (JGBs) to more than a decade-high levels this week.
Ueda’s comments come as statistics showed Japan’s core consumer inflation, a key policy indicator, rose to 3.2% in January, the most substantial rate in 19 months. After Ueda’s comments, the yen fell from a two-and-a-half-month high set after a spike in Japanese inflation, while JGB rates fell from more than a decade high. According to Yugo Tsuboi, chief strategist at Daiwa Securities, the market was deterred from aggressive purchasing since the currency may change during the three-day weekend.
Chugai Pharmaceutical surged 4.47%, providing the Nikkei with its most significant boost. Tokyo Electron, which manufactures chipmaking equipment, increased by 1%. Fast Retailing, which owns the Uniqlo brand, lost 1.16%, dragging down the Nikkei the most. Of the more than 1,600 equities traded on the Tokyo Stock Exchange’s primary market, 33% increased, 62% sank, and 3% were unchanged.
