Nikkei closed higher but monetary policy concerns limited gains

Japan’s Nikkei index recovered on Thursday from its lowest level in three months as shares of chip-related companies rose, tracking their US counterparts, but expectations of the world’s major central banks continuing to pursue monetary tightening limited gains.

The Nikkei ended the session up by 0.4 percent, recording 25,820.80 points, and trading was in a narrow range in the afternoon after a volatile morning that witnessed the index’s rise to a high level that reached 25,947.10 points, to relinquish most of those gains.

On Wednesday, the index fell to 25,661.89 points on the first trading day of 2023, the first significant drop since Oct. 3.

Chip and device maker Tokyo Electron Co. provided the biggest support for the index, adding 53 points, up 4.01 percent, and Advantest added 2.06 percent.

However, the performance of the rest of the sectors and stocks on the index was mixed, with 97 components rising on the Nikkei out of 225, 125 declining, and three remaining stable.

The broader Topix index was able to close the session with a slight increase of 0.04 percent, recording 1868.90 points, after spending most of the session in decline.

Markets in Japan and the world are still feeling the shock of the Bank of Japan when it decided to widen the range within which it allows 10-year government bond yields to move around zero.

SoftBank Group, which invests in startups, rose 1.86 percent. Sony shares rose 2.16 percent with the unveiling of its electric car at an exhibition in Las Vegas. Honda, which co-manufactured the car with Sony, rose 0.72 percent.