Japanese Stocks, Bonds Sold amid BOJ Rate Hike Speculation

Tokyo, Dec. 1 (Jiji Press)–Japanese stocks and government bonds were heavily sold on Monday, amid growing speculation about an early interest rate hike by the Bank of Japan. On the Tokyo Stock Exchange, the benchmark Nikkei 225 average slid 950.63 points, or 1.89 pct, from Friday to close at 49,303.28. The broader TOPIX index fell 40.11 points, or 1.19 pct, to 3,338.33. In Tokyo interdealer trading, the key 10-year government bond yield rose as high as 1.875 pct, the highest level since June 17, 2008. Bond yields and prices move inversely. Meanwhile, the yen strengthened to 155.37-37 per dollar at 5 p.m., against 156.28-31 at the same time Friday. In a speech on Monday morning, BOJ Governor Kazuo Ueda said that the central bank would make an “appropriate decision” on whether to raise interest rates at its Dec. 18-19 policy-setting meeting. He told a press conference later in the day that a delay in hiking rates could spur inflation and cause confusion. The remarks prompted widespread selling in the stock market, with nearly 80 pct of issues on the TSE’s top-tier Prime section losing ground. Monday’s selling can also be attributed to moves to lock in profits after the Nikkei rallied over 1,600 points the previous week, market sources said. The BOJ chief’s remarks “abruptly changed the mood in the early morning, when market participants expected a lull throughout this week,” said an official at a midsized securities firm. “Or investors may have just awaited a cue to sell.” Still, with no change in the BOJ’s policy direction, an official at an asset management firm suggested that the stock market was “unlikely to continue sliding.” A large-scale economic package adopted by the administration of Japanese Prime Minister Sanae Takaichi last week was also cited as a factor behind the selling of government bonds. END [Copyright The Jiji Press, Ltd.]