Inside Financial Markets

Nikkei falls after BOJ takes no steps to calm bond market

asiaNikkei falls after BOJ takes no steps to calm bond market

TOKYO, June 11 -IFM-Web Desk – The Nikkei share average fell as much as 1.5 percent on Tuesday afternoon after some investors were disappointed that the Bank of Japan did not announce a new long-dated funding operation to calm the bond market some had expected.

The Nikkei ¬†was down 0.5 percent at 13,441.55 after trading as low as 13,310.50. It ended the morning session flat at 13,513.28 before the BOJ’s lunchtime announcement that it kept its monetary policy steady.

“There is a bit of combination here (for the disappointment),” a senior dealer at a foreign brokerage said. “There was no expansion of the J-Reit and ETFs (exchanged traded funds) buying programme.”

“Just judging from the bond yields and the movement there, it looks like for some odd reason that people might have expected them to increase the size of their plan, which is ludicrous because they already said they were not going to.”

But he said he expected the selloff to be short-lived because the overall economic picture was good with inflation coming through and the central bank revising up its assessment of the economy.

The real estate sector .IRLTY.T extended early losses, down 2.9 percent, while Toyota Motor Corp 7203.T, the most traded stock on the main board by turnover, trimmed gains from the morning session, up 0.2 percent.

The broader Topix .TOPX index fell 0.3 percent to 1,108.26 after gaining 0.3 percent in the morning session.

The Nikkei has fallen nearly 16 percent since hitting a 5-1/2 year peak on May 23, but it is up 8.8 percent since the BOJ’s radical monetary expansion campaign was announced on April 4 and has risen 29 percent so far this year.

Ali Nawaz

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)