TOKYO — The Nikkei share average in Japan continued its downward trajectory for the third consecutive session, closing lower as the market braces for the upcoming Bank of Japan (BOJ) policy meeting. On Wednesday, the Nikkei index dipped by 0.26% to settle at 38,695.97, after momentarily breaching the significant 39,000 threshold earlier in the session.
The broader Topix index also experienced a decline, ending the day 0.33% lower at 2,648.51. This cautious trading atmosphere predominates as investors weigh the possibility of a pivotal policy shift by the BOJ, with many anticipating an increase in short-term interest rates from their current negative levels in the impending meeting or by April.
Amidst these anticipations, chip-related stocks offered some resistance to the downward pressure, mirroring the overnight gains seen on Wall Street. Notably, Tokyo Electron and Advantest recorded rises of 2.41% and 0.36%, respectively, providing a buffer against more significant losses across the board.
However, the bearish sentiment was widespread, with 137 of the 225 index constituents registering declines. Major players like SoftBank Group and Fast Retailing, the operator of the Uniqlo brand clothing stores, saw their shares drop by 0.19% and 0.69%, respectively. Daikin Industries, a leading electrical equipment manufacturer, also faced a notable dip, falling 2.64%.
The Japanese yen saw an uptick in value during the Asian morning trading session, adding pressure on exporters that typically benefit from a weaker currency. This currency fluctuation comes as the market eagerly awaits the outcome of the spring wage negotiations, expected to be released on Friday.
Market analysts are keenly observing these wage negotiations, as an increase in wages compared to the previous year could signal a more robust likelihood of the BOJ moving away from negative interest rates in the upcoming March meeting. According to Maki Sawada, a strategist at Nomura Securities’ investment content department, such a development could significantly impact market expectations and investor sentiment toward Japanese equities.
As the BOJ meeting draws near, the financial community remains on edge, closely monitoring signals that may hint at the central bank’s future direction. With the potential for policy adjustments, the trajectory of Japan’s economy and its stock market remains uncertain, prompting a cautious approach among investors navigating these volatile waters.
