Tokyo Stocks Advance Higher, Yen Drifts Lower Ahead of the BoJ's Rate Decisions

Akira Ito
22 Apr, 2024
Tokyo

Stocks attempted to rebound in Japan, and investors looked forward to the Bank of Japan's rate decision and Tokyo area inflation data later in the week. 

Last week, market indexes in Tokyo plunged 4.7% and declined seven of the last nine weeks, following sharp losses in New York and Europe after investors lowered their expectations of rate cuts in the U.S.

The sharp fall in market indexes was led by a plunge in popular semiconductor and tech stocks after Taiwan Semiconductor projected a weaker-than-expected sales outlook. 

Taiwan-based TSMC lowered its growth estimate for global logic semiconductors to 10% from the previous estimate of more than 10%. 

The S&P 500 index registered its worst weekly decline in six months after investors estimated that the previously estimated three rate cuts are less likely to materialize this year after the latest data showed a resilient U.S. economy. 

The Nikkei 225 Stock Average rose 0.4% to 37,222.11, and the Topix index advanced 1% to 2,651.93. 

Asian markets rebounded from a sharp selloff in the previous week due to the lowered rate-cut expectations in the U.S. 

Benchmark indexes in Seoul jumped 0.8%, in Sydney advanced 1.0%, in Shanghai edged up 0.01%, and in Hong Kong soared 2.2%. 

The People's Bank of China held steady its 1-year and 5-year loan prime rates at 3.45% and 3.95%, respectively. 

The decision by the central bank was widely anticipated after China's economy expanded at a faster-than-expected pace of 5.3%. 

In Tokyo's trading, tech stocks led the gainers in Monday's trading. 

SoftBank, Tokyo Electron, Advantest, and Screen Holdings rebounded between 0.5% and 2.5%. 

Tech stocks are expected to be in focus as Alphabet, Meta Platforms, Microsoft, SK Hynix, and Advantest are scheduled to release their quarterly results later in the week. 

Financial stocks advanced in the hopes that the Bank of Japan would lay the groundwork to lift rates; however, Governor Kazuo Ueda signaled last week that the central bank is likely to retain an accommodative stance for some time. 

The Bank of Japan is scheduled to announce its rate decisions on Friday, April 26.  

The yen traded at 154.64 against the U.S. dollar. 

Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsubishi gained between 1% and 1.5%.