Japanese Stocks Rise as BoJ Holds Rates Steady

Japanese stocks climbed on Thursday after the Bank of Japan (BoJ) kept its key interest rate unchanged, offering some stability in a region marked by global economic uncertainty and trade policy shifts.

The gains came during thin trading, as many Asian markets — including Hong Kong and mainland China — were closed for the May 1 holiday.

As widely expected, the BoJ held its benchmark interest rate at around 0.5% for the second consecutive meeting. However, it delivered a sobering update to its economic outlook, slashing its growth forecast for fiscal 2025. Japan’s GDP is now projected to rise just 0.5%, down sharply from its previous estimate of 1.1%.

Both the Nikkei 225 and the broader Topix index edged higher in early trading, with investor sentiment bolstered by the central bank’s steady policy stance despite concerns over U.S. trade tensions and slowing global growth.

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Overnight, U.S. markets experienced a volatile session. Stocks opened sharply lower after data revealed the U.S. economy shrank at an annual rate of 0.3% in Q1 — a signal that recession fears are far from over. But optimism returned later in the day as personal spending data for March beat expectations, helping equities recover.

Tech giants led the rebound. Meta (parent company of Facebook, Instagram, and WhatsApp) and Microsoft both posted better-than-expected quarterly earnings. Shares in Meta jumped over 4% in after-hours trading, boosting overall investor confidence.

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“Strong earnings reports from U.S. IT companies are expected to drive gains, especially in the electronics sector,” said Takashi Ito, a strategist at Nomura Securities.

Kathleen Brooks, research director at XTB, noted that fears of U.S. economic decline might be overstated. “For now, concerns about the end of American exceptionalism seem a bit extreme,” she wrote. “Microsoft and Meta beating earnings expectations may even counter narratives about China’s AI challenge to U.S. tech dominance.”

Looking ahead, investors are closely watching Friday’s U.S. jobs report, the first key economic indicator following the Trump administration’s sweeping tariffs introduced on April 2. Though many of the duties have since been suspended, the data could offer insight into how the broader economy is holding up amid ongoing policy turbulence.