BoJ Holds Rates Steady; Advantest, Hitachi, and Renesas In Focus After Earnings

Akira Ito
31 Oct, 2024
Tokyo

Stock market indexes in Tokyo headed lower, tracking losses in overnight trading in New York. 

The Nikkei 225 stock average declined 0.9% and the Topix index fell 0.7% as investors reviewed the latest earnings from domestic corporations. 

The Bank of Japan held its key lending rate at 0.25%, as widely expected, and retained its inflation and growth outlooks for the current fiscal year. 

The policy committee, after a two-day meeting, left its lending rate unrevised and cited weakening inflationary forces following the recent decline in energy prices. 

The central bank also kept its core inflation, which excludes fresh food prices, estimate at 2.5% but lowered its overall inflation outlook to 1.9% from the previous estimate of 2.1%.

The BoJ retained its fiscal 2026 inflation estimate at 1.6%. 

The central bank held its real economic growth estimate at 0.6% in fiscal 2024 and 1.0% in fiscal 2026, but lifted its fiscal 2025 estimate to 1.1% from the previous estimate of 1.0% in July. 

Policymakers are struggling to understand the impact of the results of the recent national election amid rising political instability as the central bank prepares to lay the groundwork to normalize interest rates and decades of negative interest rates. 

The Bank of Japan ended its negative rate policy in March with the first rate increase in 17 years, followed by another rate hike in July, after decades of unconventional monetary policy. 

 

Japan Stock Movers 

The Nikkei 225 stock average decreased 0.9% to 38,942.64, and the broader Topix index fell 0.7% to 2,685.25. 

The yen was relatively unchanged at 152.77 against the U.S. dollar after the Bank of Japan announced its policy decisions. 

Tech stocks in Tokyo were under pressure following the weaker-than-expected results from Microsoft and Meta Platforms, and investors questioned the level of investment in artificial intelligence infrastructure. 

Advantest Corp. jumped 6.4% to ¥9,148.0 after the company raised its annual earnings outlook for the surge in demand for its AI-related testing tools. 

Net sales in the first half ending in September increased 51.4% to 329.2 billion yen, net income surged 167.3% to 69.3 billion yen, and diluted earnings per share increased to 93.64 yen from 35.06 a year ago. 

The company estimated revenue in the fiscal year 2024 to increase 31.6% to 640 billion yen, net income to rise 96% to 122 billion yen, and basic earnings per share to increase to 165.01. 

Hitachi Ltd. declined 5.6% to ¥3,924.0 after the company reported weaker-than-expected financial results. 

Revenue in the first half ending in September decreased 92% to 4.54 trillion yen from 4.96 trillion yen, net income increased to 315.4 billion yen from 232.3 billion yen, and diluted earnings per share rose to 63.22 yen from 44.78 yen. 

Renesas Electronics dropped 5% to ¥2,110.0 after the advanced chip maker reported weaker-than-expected financial results. 

Revenue in the third quarter declined to 345.3 billion yen from 379.4 billion, and net income fell to 86 billion yen from 108.3 billion yen from a year earlier, respectively. 

The company retained its estimate of the full-year revenue range between 1.326 trillion yen and 1.341 trillion yen.