On Tuesday, Japanese bank shares rose on expectations that the central bank will ease its restrictions over the yield curve later in the day. This helped to counteract a significant slide in IT companies that followed losses in their American counterparts and Panasonic’s underwhelming earnings.
As of 10:28 local time (0128 GMT), the Topix banking index increased by 2.25%, leading advances among the 33 industry groupings listed on the Tokyo Stock Exchange (TSE).
The Bank of Japan is expected to discuss lifting the long-term yield ceiling from the current 1% during its policy meeting, which is expected to conclude somewhere around the TSE’s midday trading break, according to an overnight article in the Nikkei newspaper.
Shortly after the market opened, the yield on the benchmark 10-year Japanese government bond shot to a new decade high of 0.955%, and the yen traded at about 149.42 per dollar, having risen as high as 148.81 overnight, over two weeks earlier.
Equity market expert at Nomura Securities Kazuo Kamitani stated, “It feels to me personally like there’s going to be a policy tweak today” on the BOJ.
He said, “I don’t expect a big swing in the long-term yield from here, as it’s already come a good way, but investors will want to confirm that,” in the case of a hawkish turn in the market.
Japan’s Topix index increased by 0.43%, led by a 0.65% increase in an index of value shares, such as banks, which above a 0.21% increase in growth shares, which are primarily IT companies.
With a significant skew towards tech firms, the Nikkei 225 share average fell 0.18% to 30,640.89.
The largest drag on the Nikkei was Advantest, a maker of chip-testing equipment, which lost 44 points with a 4.3% decline. The powerhouse in chip manufacturing equipment, Tokyo Electron, dropped 1.94% and lost 38 points.
All three of Wall Street’s major indexes increased on Monday, although the U.S. Philadelphia SE semiconductor index fell 1.3%.