The second indicator, the Topix, also ended the session down by 0.35% to 3,147.68 points.
The Nikkei index reflects the unweighted average of the 225 leading stocks on the Tokyo Stock Exchange, while the Topix index aggregates the stocks of the 1,600 largest listed companies.
The Tokyo Stock Exchange reacted pessimistically to today’s announcement by Japan’s central bank to keep interest rates unchanged, in order to closely analyze the impact of the reduction in U.S. interest rates.
The United States Federal Reserve decided on Wednesday to cut rates by 25 basis points, to a range of 4.00% to 4.25%, for the first time since December 2024.
“The Japanese economy has recovered moderately, although some weakness has been evident,” stated the Bank of Japan (BoJ), adding that several risks exist for economic prospects, mainly due to external factors.
“In particular, how trade and other policies will evolve in each jurisdiction and how international economic activity and prices will react to these remain highly uncertain,” emphasized the central bank.
In this context, the institution added, “it is necessary to pay close attention to the impact of these developments on financial and currency markets, as well as on economic activity and prices in Japan.”
On the other hand, the BoJ announced it will begin selling exchange-traded funds and other assets acquired over a decade.
The sales will commence “as soon as the necessary operational preparations are completed,” with an estimated annual amount of 330 billion yen (1.9 billion euros), informed the central bank.
The BoJ also announced the sale of Japanese real estate investment trusts (J-REITs) held by the institution at an annual rate of five billion yen (28.8 million euros).
The institution promised it will attempt to “sell the holdings in ETFs and J-REITs at appropriate prices, considering the financial markets’ situation.”
The goal is to avoid, “as much as possible,” incurring losses or destabilizing these assets, stated the BoJ in a communication.
The Japanese central bank indicated that the pace of the outlined sales may be temporarily adjusted or suspended in response to changes in market conditions.
The decision represents a step in the normalization of the BoJ’s monetary policy, which began an adjustment in March 2024 concerning the purchase of exchange-traded funds and other assets.
The BoJ’s holdings have been expanding amid the recent trend of rising Japanese stocks, which reached record levels on the local stock market.
