Japanese shares tread water as investors weigh yen surge, BOJ hike

TOKYO: Japanese shares treaded water on Tuesday as investors weighed upbeat domestic data against a stronger yen and growing expectations of a Bank of Japan interest rate hike next week. The benchmark Nikkei 225 advanced 0. 31% to 66, 608. 42 in early trading. The broader Topix slipped 0. 51% to 4, 104. 89. Trading cues were scarce with US markets closed for a holiday on Monday, refocusing attention on domestic data. Revised figures on Tuesday showed Japan’s second-quarter gross domestic product expanded faster than the initial reading. A separate release showed real wages rose 2. 4% in July from a year earlier, the biggest increase since May 2021. Markets are pricing a near certainty Japan’s central bank will raise its key rate to 1. 25% next week. The yen continued its climb, reaching 153. 37 per dollar, the strongest since February. “Given growing speculation regarding a Bank of Japan interest rate rise at its meeting next week, we anticipate today’s trading will be rather subdued, ” said Maki Sawada, an equities strategist at Nomura Securities. “This appreciation of the yen is also weighing on the market. ” Oil and coal product shares led gains among Topix industry groups, rising 1. 54%, while sectors tracking transportation equipment and rubber makers lagged, down 2. 51% and 2%, respectively. Breadth was negative on the Nikkei, with 57 advancers against 163 decliners and 5 unchanged. The largest losers were Taiyo Yuden, down 4. 90%, followed by Mercari, down 4. 77%, and JTEKT, down 4. 66%. The index’s largest percentage gainers were SoftBank Group, up 6. 24%, followed by Nitori Holdings, up 4. 54%, and Denka, up 2. 65%.

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