The main indicator of the Tokyo Stock Exchange, the Nikkei, fell more than 2% in the second tranche of trading today after the Bank of Japan’s (BoJ) decision to tighten its monetary policy, a move perceived by the market as a shift in its easing strategy.
The Nikkei lost more than 600 points, or 2.22%, in the twenty minutes after its half-session break to 26,633.95.
The Broadest Index Topix, which includes the securities with the largest capitalization, fell 21.65 points or 1.12%, to 1,913.76 integers.
The Tokyo parquet, which had started the day in positive encouraged by bargain hunting, reacted immediately and negatively to the decision of the BoJ, which took most analysts by surprise.
The Japanese central bank decided on Tuesday to keep ultra-low benchmark interest rates unchanged, but slightly expanded the range of ten-year bond yields, reducing its easing strategy to some extent.
The permissible range of long-term interest rate fluctuations, which was currently at +/-0.25%, will be extended to +/-0.5%, which in practice may have an effect on interest rates on loans to individuals and the private sector.
Long-term government bonds are seen as an indicator for the future evolution of interest rates, and the BoJ’s move today has been interpreted by investors as a first step towards raising interest rates in the near future.
The decision also generated a rapid appreciation of the yen, which rose to 133 units per dollar from the middle range of 137 units in which it moved at the start of the day, and which in turn also had a negative impact on the Tokyo parquet.