FX.co ★ Japanese Shares Fall on BOJ Rate Hike Fears

On Friday, the Nikkei 225 Index declined by 1.14% to settle at 50,446, while the broader Topix Index decreased by 1.05% to 3,363. This decline pared back some of the gains from the previous session amid increasing speculation that the Bank of Japan might raise interest rates later this month. Reports suggest that key members of Prime Minister Sanae Takaichi's administration would support the central bank if it decides to increase rates in December, although some senior officials have expressed caution regarding the timing. The market is factoring in a potential move this month, with expectations of 1-2 further rate hikes anticipated next year. Simultaneously, Wall Street experienced a pause after the release of employment data, indicating a strong US labor market, which slightly diminished forecasts for a Federal Reserve rate reduction next week. Significant declines in Japan were seen in major companies such as Advantest (-2.4%), Tokyo Electron (-2%), and Toyota Motor (-2.3%). In corporate developments, Mitsubishi UFJ announced an extension of their 17-year partnership with Morgan Stanley in asset management.