Japanese stocks rise on the appeal of yield stocks as interest rate rises approach

Japanese stocks rise on the appeal of yield stocks as interest rate rises approach
Japanese stocks rise on the appeal of yield stocks as interest rate rises approach

Japanese stocks rose on Thursday, rebounding from declines in the previous session, as investors turned to value stocks in anticipation of rising interest rates that would hurt growth stocks.

The Nikkei was up 0.5% at 38,392.1 at midday, while the broader Topix was up 0.76% at 2727.05.

Bank of Japan board members were mostly optimistic at their April policy meeting, with many emphasizing the need for steady rate hikes, according to a summary of views expressed at the meeting. Of the reunion.

“The summary was more optimistic than Governor (Kazuo) Ueda after last month’s policy meeting,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

“This has sparked speculation that the BOJ will raise interest rates sooner than the market expected.

Some members saw the possibility of a faster-than-expected pace of rate hikes amid heightened prospects for inflation to sustainably remain at, or even exceed, the BOJ’s 2% target, according to the summary.

The yield on Japanese 10-year bonds rose to 0.91%, its highest level since April 26.

The Topix index of value stocks rose 0.79%, outperforming the index of growth stocks, which rose 0.73%.

Rising yields could hurt growth stocks, such as chip-related companies and other technology companies whose appeal relies on future cash flow.

Chipmaking equipment maker Tokyo Electron fell 1.16% and was the biggest drag on the Nikkei.

Health equipment maker Omron jumped 11.69% and became the Nikkei’s biggest booster after its annual operating profit forecast topped market expectations.

Financial group Orix jumped 8.22% after announcing a share buyback.

Technology investor SoftBank Group fell 1.51% after Arm Holdings fell about 7% in extended U.S. trading after the artificial intelligence chip maker’s annual revenue forecast disappointed Investors. SoftBank Group owns approximately 90% of Arm. (Reporting by Junko Fujita; Editing by Savio D’Souza)

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