Japan Stocks fall on profit booking, BOJ keeps monetary policy unchanged

The Japan share market declined for second straight session on Thursday, 19 December 2019, as investors continued withdrawing profits off the table after Bank of Japan left its ultraeasy monetary policy unchanged on Thursday, despite signs of a slowdown in the country's economy since a consumption tax hike in October. Around late afternoon, the 225-issue Nikkei Stock Average declined 83.77 points, or 0.35%, to 23,850.66, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 4.49 points, or 0.26%, at 1,733.91.

Total 28 issues of the 33 industry category of Topix index dived into negative territory, with Pulp & Paper, Securities & Commodities Futures, Marine Transportation, Nonferrous Metals, and Precision Instruments issues being notable losers, while Mining, Information & Communication, and Pharmaceutical issues were notable gainers.

 

The market kept heading south as profit-taking pressure increased amid a dearth of fresh buying incentives. Investors also boosted selling to square positions in light of the yen's firming against the dollar and after Bank of Japan left its ultraeasy monetary policy unchanged.

The Bank of Japan left its ultraeasy monetary policy unchanged Thursday and maintained its upbeat assessment of the economy, suggesting that no imminent expansion of stimulus was forthcoming. But the central bank offered a gloomier view on factory output than at its previous rate review in October.

The BOJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%. It will also continue its massive asset purchase program.

The decision to stand pat keeps Japan in line with the U.S. Federal Reserve and the European Central Bank, which have both signaled that monetary policy will be in a holding pattern for the time being. Also,the decision came after the BOJ's quarterly Tankan survey released Friday showed sentiment among large manufacturers worsened for a fourth straight quarter to a near seven-year low.

The phase one U.S.-China trade deal, a stabilizing of global manufacturing readings and a stronger mandate for the U.K. to leave the European Union have given time for Governor Haruhiko Kuroda to assess how Prime Minister Shinzo Abe's $120 billion fiscal package will prop up growth in an economy contending with a sales tax increase, an export slump and destruction caused by a super typhoon. The government Wednesday estimated Japan's growth to be 1.4% in the year starting in April, increasing a likelihood that the BOJ will upgrade its projection of 0.7% in a quarterly report next month.

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