Nikkei Pulls Back From Record as Kono Presses BOJ for Rate Hike

Japan’s benchmark Nikkei 225 briefly climbed to a record 43,876.42 on Tuesday, buoyed by gains in heavyweight technology stocks and a weaker yen, before profit-taking erased the advance. The index closed at 43,546.29, down 168.02 points, or 0.38%, its first decline in three sessions. The broader Topix slipped 0.14% to 3,116.63. Trading turnover on the Prime section reached ¥5.08 trillion, with more than 60% of listed names still finishing higher as dip-buyers stepped in. SoftBank Group and Fast Retailing, both up sharply this month, reversed early gains and together shaved nearly 200 points off the Nikkei, while chip-equipment maker Tokyo Electron added support. Market participants said the rapid rally since early August has left valuations stretched, prompting investors to lock in gains ahead of the Federal Reserve’s Jackson Hole symposium later this week. Separately, veteran Liberal Democratic Party lawmaker Taro Kono said Japan needs a new economic framework in which the Bank of Japan “starts hiking rates gradually” and the government moves to restore fiscal health. Prolonged negative real borrowing costs are undesirable, he argued, adding that policymakers should aim for a “slightly stronger” yen after years of depreciation. Kono’s remarks revived speculation that the BOJ could raise its short-term rate as early as the September policy meeting. The currency market was subdued, with the yen oscillating in the upper-¥147 band and three-month implied volatility sliding to the lowest level in about a year, underscoring waning expectations of sharp near-term swings.