The Nikkei 225 Index climbed 0.9% to above 69,900 on Tuesday, reversing earlier losses and setting a new record high after the Bank of Japan implemented a widely anticipated 25 basis point interest rate hike to 1%. The decision underscored policymakers’ determination to tackle inflationary pressures associated with the Iran conflict and to bolster the persistently weak yen. Still, the move was not unanimous: some policymakers opposed the increase, with Toichiro Asada arguing that downside risks to growth and employment outweighed upside risks to inflation.
Market participants also tracked geopolitical developments amid expectations that the US and Iran will sign a peace agreement in Switzerland on Friday, a move that could pave the way for reopening the Strait of Hormuz. Technology stocks led the advance, with notable gains from Kioxia Holdings (4.4%), Taiyo Yuden (6.2%), Murata Manufacturing (5.9%), Advantest (3.1%), and Fujikura (8.8%).