Nikkei closes lower as investors await BOJ cues on policy

The Nikkei share average in Japan concluded Monday's session with a 0.64 per cent decline, closing at 32,758.98, while the broader Topix slipped 0.66 per cent to 2,316.86. Investors displayed caution as they awaited cues from Bank of Japan (BOJ) Governor Kazuo Ueda during the ongoing two-day policy meeting, set to conclude on Tuesday. Although market consensus leans towards the BOJ maintaining its current ultra-low rates policy, there is anticipation for any potential signals regarding a policy shift.

Shoichi Arisawa, the general manager of the investment research department at IwaiCosmo Securities, noted the difficulty in generating buy orders due to investor wariness about potential market overreactions to sensitive comments from Governor Ueda. 

"It was hard to make buy orders today," said Arisawa. 

Last week, the market experienced significant movements following Ueda's remarks, sparking speculation about a possible announcement on ending the negative rate policy as early as this month.

Fast Retailing, the operator of Uniqlo clothing shops, led the decline with a 1.18 per cent fall, while Advances, a chip-testing equipment maker, dropped 1.75 per cent, and Recruit Holdings, a staffing agency, lost 3.42 per cent. Conversely, shipping firms saw a notable 5.61 per cent increase, fueled by speculation of shipping fee hikes after major freight firms, including MSC, announced their avoidance of the Suez Canal due to heightened Houthi militant activity in the Red Sea.

The Tokyo Stock Exchange's 33 industry sub-sectors revealed only four sectors experiencing gains. Among the 225 stocks on the Nikkei, 45 recorded increases, 179 declined, and one remained flat. The market remains attentive to BOJ announcements amid the backdrop of evolving economic challenges foreseen by Governor Ueda for the year-end and the beginning of the next year.

(With Reuters inputs)