Japan’s Nikkei hits record high above 41,000 as post-BOJ rally continues

Investing.com-- Japan’s Nikkei 225 index rose in morning trade on Friday, notching a record high above key levels as investors remained largely upbeat over the Bank of Japan remaining accommodative in the near-term.

The Nikkei 225 rose as much as 1% to a record high of 41,133 points, before capitulating some gains. The broader TOPIX also rose 0.5% to a record high. 

Japanese stocks extended their gains from Tuesday after the BOJ said it will keep monetary conditions largely accommodative in the near-term, even as it hiked interest rates for the first time in 17 years and ended a bulk of its asset purchase programs.

But the BOJ still warned of some near-term weakness in the Japanese economy, particularly in private consumption, which is expected to keep monetary policy largely loose.

Sharp surges, export-oriented sectors gain on weak yen 

Electronics maker Sharp (OTC:SHCAY) Corp (TYO:6753) was the top gainer on the Nikkei, rising 6.4% after reports said the firm was planning to scale back its laggard liquid crystal display business. 

Automaking stocks Nissan Motor Co (TYO:7201), Suzuki Motor Corp. (TYO:7269) and Honda Motor Co Ltd (TYO:7267) rose more than 3% each as improved global risk appetite and a dovish near-term outlook for the BOJ dented the Japanese yen.

The USDJPY pair surged back above the 151 level on Thursday.

Weakness in the yen benefited most other export-oriented sectors on the Nikkei. 

Nikkei rally to lose steam after 41,000- Citi

But Citi analysts said in a recent note that while the Nikkei was likely to rally as far as 41,000 in the immediate aftermath of the BOJ, its gains above that level appeared doubtful.

Citi analysts expect the Nikkei to turn rangebound around current levels, especially as Japanese monetary conditions eventually tighten this year.

Strong consumer price index data for February already lent some credence to the BOJ’s pivot, as inflation shot back up and above the central bank’s annual 2% target.