Japan stocks edge higher as investors eye BOJ, Fed paths

Yokohama Rubber Co

20/02/2023 06:52

By Kevin Buckland
       TOKYO, Feb 20 (Reuters) - Japanese shares posted small
gains on Monday as cautious traders awaited a week of important
U.S. and global economic data as well as testimony by the
incoming Bank of Japan (BOJ) leadership team.
    The Nikkei  .N225  edged up 0.07% to 27,531.94 at the close,
staying near the middle of its range since Jan. 24.
    The broader Topix  .TOPX  gained 0.39% to 1,996.78.
    The Nikkei underperformed mostly due to weakness in index
heavyweight chip stocks that followed Wall Street's declines on
Friday, while a rise in U.S. bond yields lifted financial shares
and drove gains on the Topix. 
    Declines in energy shares also stood out on the Nikkei amid
a slide in crude oil prices, though earnings produced a big
winner in tiremaker Yokohama Rubber  5101.T , which soared
10.2%.
    Of the Nikkei's 225 components, 162 rose while 59 fell, with
four flat. 
    The Nikkei is likely to keep to a range of about 300 points
on either side of 27,500 as investors await trading cues, said
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS
Asset Management.
    Despite the jump for Yokohama Rubber, "earnings have not
been very good this season, and I can't be very optimistic about
the outlook as it is still murky," he said. "A lot depends of
moves by the U.S. and Japanese central banks, and the dollar-yen
exchange rate."
    Strong U.S. economic data and largely hawkish Federal
Reserve commentary have been feeding expectations of higher
interest rates for longer. Inflation figures this week will be
parsed for further clues, as will key purchasing manager surveys
from the United States and other major economies.
    The main event for Japanese markets though will be BOJ
Governor nominee Kazuo Ueda's lower house testimony on Friday,
which will be followed by an upper house appearance next Monday.
    While Ueda has shown himself so far to be a policy dove,
investors still expect an end to unpopular yield curve controls
during his tenure, and will watch for indications of how soon
that could be done.
 (Reporting by Kevin Buckland; Editing by Rashmi Aich and Devika
Syamnath)
 ((Kevin.Buckland@thomsonreuters.com;))