Stocks closed sharply higher on the Tokyo Stock Exchange on Friday after showing wild swings due to mixed investor reactions to the Bank of Japan’s surprise decision to introduce negative interest rates.
The 225-issue Nikkei average jumped 476.85 points, or 2.8 percent, to end at 17,518.30. On Thursday, the key market gauge lost 122.47 points.
The Topix index of all first-section issues rose 39.97 points, or 2.87 percent, to 1,432.07, after falling 8.60 points the previous day.
After opening higher in the wake of a rebound in U.S. stocks and solid crude oil prices, the Nikkei average erased gains amid uncertainty over corporate earnings in Japan, brokers said.
In particular, investor sentiment was hurt by a tumble of Fanuc, a day after the industrial robot manufacturer revised down its full-year earnings forecast, brokers said.
In early afternoon trading, the Nikkei average surged almost 600 points after the BOJ wrapped up a two-day Policy Board meeting and announced the negative interest rate decision.
But the Nikkei fell quickly into negative territory and extended losses to some 270 points at one stage due to skepticism about the effectiveness of the new monetary easing step, brokers said.
The Nikkei average, however, shot up some 500 points again in late afternoon trading, as investors accelerated buybacks of undervalued issues on the back of the yen’s rapid weakening against the dollar, brokers said.
The BOJ decided to apply an interest rate of minus 0.1 percent to some of financial institutions’ current account deposits at the central bank, while keeping unchanged the policy of increasing the country’s monetary base at an annual pace of ¥80 trillion.
After the BOJ announcement, the dollar briefly shot up above ¥121 and the key 10-year Japanese government bond yield fell to a record low of 0.090 percent.
Many analysts said the BOJ’s additional easing step was a surprise as BOJ Gov. Haruhiko Kuroda recently denied the possibility of adopting negative interest rates.
“The negative interest policy will likely prompt a further weakening of the yen and be positive for the earnings of export-oriented companies,” said Hideyuki Suzuki, head of investment market research department at SBI Securities Co.
Still, uncertainty remains as to whether the negative interest policy would really buoy the Japanese economy, an official at a major securities firm said.
Rising issues far outnumbered falling ones 1,721 to 186 in the TSE’s first section, while 28 issues were unchanged.
Volume ballooned to 4.1 billion shares from Thursday’s 2.1 billion.
Realtors were buoyant on hopes for active real estate investments thanks to the BOJ’s new policy. Among them were Mitsubishi Estate, Mitsui Fudosan and Sumitomo Realty.
The yen’s depreciation spurred purchases of automakers Toyota, Mazda and Honda, as well as technology giants Sony, Panasonic and Hitachi.
On the other hand, mega-bank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho were battered by heavy selling amid heightened concerns over deteriorated earnings as they will be forced to pay a 0.1 percent fee for some of their deposits at the BOJ, brokers said.
Fanuc dived 12.72 percent on earnings worries. Other major losers included Dai-ichi Life Insurance, Mitsubishi Electric and Japan Post Bank.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average surged 580 points to close at 17,640.