Yen Approached Recent Low and JGB Yield Rebounded Above 1% Ahead of BoJ's Rate Decisions

Akira Ito
11 Jun, 2024
Tokyo

Benchmark indexes in Tokyo extended gains for the second day in a row, tracking gains in tech stocks in overnight trading in New York. 

The Nikkei 225 and the Topix indexes diverged in lackluster trading, and tech stocks powered the market advance in Tuesday's trading. 

The yen weakened to 157.25 against the U.S. dollar, and the yield on a 10-year Japanese government bond rebouned to 1.02% ahead of the Bank of Japan's monetary policy decisions on Thursday. 

The BoJ is widely expected to hold rates steady and continue its purchase of Japanese government bonds, fueling another leg down in the yen. 

The U.S. Federal Reserve is expected to hold its interest rate range steady between 5.25% and 5.50%, and the central bank is also likely to cool down rate expectations further. 

The wide yield differential between the U.S. and Japan is likely to persist as the Bank of Japan shows no interest in lifting near-zero rates, despite the cost of rising imports. 

The persistent yield gap is also putting additional pressure on the yen, and currency traders are bracing for the price to range between 165 and 170 before the year's end. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average increased 0.2% to 39,098.62, and the Topix index fell 0.2% to 2,776.43. 

Tech stocks led the gainers for the second day in a row, and Tokyo Electron, Advantest, Screen Holdings, and Socionext gained between 0.3% and 1.2%. 

However, Softbank bucked the trend and edged lower by 0.6% to ¥9,666.0. 

Automotive stocks lacked direction after investors looked for bargains in the beaten-down sector after a certification scandal engulfed the vehicle makers. 

Toyota Motor decreased 0.5% to ¥3,254.0, Honda Motor was unchanged at ¥1,708.0, and Nissan Motor edged up 0.05% to ¥545.40. 

Banks were in focus in active trading ahead of the Bank of Japan's rate decisions on Thursday. 

Mitsubishi UFJ decreased 1.0.2% to ¥1,632.50, Sumitomo Mitsui declined 0.8% to ¥10,280.0, and Mizuho Financial fell 0.2% to ¥3,141.0. 

Taiyo Yuden Company, the materials and electronics engineering company, advanced 3.3% to ¥3,576.0, and Ebara, the maker of turbines and pumps, increased 3.4% to ¥12,165.0. 

Eisai Company decreased 3.3% to ¥6,649.0.