Tokyo stocks open lower on higher yen

December 21, 2022 (MLN): Tokyo stocks opened lower Wednesday, as a higher yen triggered by a surprise Bank of Japan (BoJ) policy tweak weighed on the market despite overnight Wall Street rallies.

 The benchmark Nikkei 225 index was down 0.30%, or 79.04 points, at 26,488.99 in early trade, while the broader Topix index lost 0.19%, or 3.68 points, to 1,901.91.

Japanese shares began with falls "as gains in the US market were small, while we see a higher yen" against the dollar, senior market analyst Toshiyuki Kanayama of Monex said in a note.

The dollar fetched 131.71 yen in early Asian trade, against 131.69 yen in New York, where the greenback slid further after it dropped from a daily high of 137 yen to 133 yen within minutes of Tuesday's BoJ decision in Tokyo.

 Overnight, Wall Street stocks mostly ended higher, recovering from a four-day slump as investors tried to look past market uncertainty and fears of a slowdown.

The Dow Jones Industrial Average picked up 0.3% to 32,849.74 while the tech-rich Nasdaq Composite Index was nearly flat at 10,547.11.

The broad-based S&P 500 ticked up 0.1% to 3,821.62.

That came despite the Japanese central bank's policy shift, which "stunned markets" and "sent the dollar tumbling, which gave all risky assets a little jingle," Oanda senior market analyst Edward Moya said in a note.                  

"No one was expecting this to happen before Governor (Haruhiko) Kuroda's term ends in April," he said.

After a two-day policy meeting, the bank said Tuesday it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would "improve market functioning".                   "Pessimism for equities remains, as earnings and credit risks remain widely in place," Moya of Oanda said.

Panasonic was down 2.65% at 1,158 yen, Hitachi was off 1.77% at 6,768 yen, and Sony Group was down 1.64% at 10,180 yen.

Toyota was down 2.47% at 1,799.5 yen and construction machine maker Komatsu was off 1.03% at 2,983 yen.

Banks remained higher on expectations of larger margins following the BoJ policy tweak, with Sumitomo Mitsui Financial Group soaring 6.33% to 5,289 yen, and Mizuho Financial Group climbing 4.70% to 1,850.0 yen.

AFP/APP