Japanese shares rose on Friday, outshining weaker Asian markets, following the Bank of Japan’s (BOJ) announcement to gradually reduce its substantial bond purchases in the future. Tokyo’s Nikkei 225 index reversed earlier losses to trade 0.3% higher, while the yen fell to 158.19 per dollar, marking its lowest point in over six weeks. The BOJ’s decision to continue buying government bonds at a current pace of approximately 6 trillion yen ($38 billion) per month, while planning to detail its tapering strategy at its July meeting, mitigated some expectations of an immediate shift. This cautious approach comes as investors digest the Federal Reserve’s recent stance on U.S. interest rates, which remains hawkish despite softer-than-expected inflation data.
The BOJ’s lack of urgency in tightening monetary policy left markets seeking clearer direction. Fred Neumann, chief Asia economist at HSBC, noted that by not providing specific details on the bond purchase reduction, the BOJ indicated it was not in a rush to alter its policy. The yen’s continued decline, reaching levels last seen in late April, reflects its sensitivity to U.S. Treasury yields. Meanwhile, other Asian markets wavered, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.10% and Chinese blue-chip stocks falling 0.4%. In contrast, European futures pointed to a positive opening, with Eurostoxx 50 and FTSE futures up 0.3%, despite ongoing political uncertainties affecting the euro.