Investors Divided About BoJ's Rate Decisions, Softbank's Big U.S. Investment Pledge Invites Skepticism

Akira Ito
17 Dec, 2024
Tokyo

Stock market indexes in Tokyo reversed morning gains to close down as investors turned cautious ahead of rate decisions from central banks of Japan and the U.S. 

The Nikkei 225 stock average declined 0.3%, and the Topix index dropped 0.4% amid growing uncertainty about the rate path in Japan. 

On Wednesday, the U.S. Federal Reserve is widely anticipated to cut its policy rate by 25 basis points, and the central bank may settle on fewer rate cuts in 2025 amid resurgent inflation. 

The Bank of Japan on Thursday may postpone its rate increase till its first meeting in 2025 as policymakers are signaling a lack of urgency in raising rates. 

Central banks of the UK, Sweden, Norway, Thailand, the Philippines, and Indonesia are set to announce their rate decisions this week amid elevated trade tensions and rising political uncertainty in the eurozone. 

The yen strengthened against the U.S. dollar ahead of the Bank of Japan's rate decisions, as the rate differential between the two currencies is expected to narrow over the next few months. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average decreased 0.3% to 39,364.68, and the broader Topix Index fell 0.4% to 2,728.20. 

SoftBank jumped 4.4% to 2,728.20 after CEO Masayoshi Son announced a plan to invest $100 billion in the U.S. and create 100,000 jobs without giving details. 

Son had made a similar pledge to invest $50 billion in 2016 at the start of the first presidential term of Donald Trump, and those announcements failed to deliver the promised job creation of 50,000. 

Softbank Group has $27 billion in cash, and the Vision Fund controlled by the company has less than $3 billion available for investment. 

Son's access to capital largely comes from the Middle East sovereign funds, and the Vision Fund's previous investments in Uber, DoorDash, and Arm Holdings PLC were the few success stories amid a string of failed investments.

While Trump favors splashy news announcements, a similar pledge in the first presidential term, to invest billions in a fabrication plant by Foxconn Technology, was quickly abandoned after an initial investment of a few million dollars. 

President Trump's bombastic claims of attracting foreign investments are not designed to deliver for U.S. workers or entrepreneurs but are mostly viewed as political stunts. 

Advantest Corp. plunged 9.5% to ¥8,664 after the company released its latest testing solution for advanced testing. 

Tokyo Electron jumped 0.8% to ¥23,840.0. Screen Holdings jumped 0.4% to ¥9,206, and Lasertec Corp. advanced 1.2% to ¥15,485. 

Nippon Steel Corp. declined 1.6% to ¥2,982.50 amid growing uncertainty about the company's plans to acquire U.S. Steel as workers' unions, regulators, and politicians pour cold water over the proposed acquisition. 

Japan Steel Works advanced 1.6% to ¥6,469. 

Fast Retailing Co. Ltd. added 1.3% to ¥53,430; Isetan Mitsukoshi gained 0.2% to ¥2,366.50, and Seven & I Holdings Co. Ltd. inched up 0.1% to ¥2,513.