Nikkei Jumps After BoJ Hike to ¥69,245 as Oil Falls

The Bank of Japan raised its policy rate by 25 basis points to 1% on June 16, the highest level since 1995. The Nikkei 225 climbed to ¥69,245 on the same day.

The BoJ described the increase as aimed at reining in rising inflation and supporting the yen after a period of depreciation. Traders noted the hike matched market expectations and followed a pause in adjustments since December. The yen is trading near the critical 160 level against the dollar, close to its all-time high of 160.70.

Global energy prices fell after the United States and Iran reached a memorandum of understanding on ending the conflict that began on February 28. Brent crude traded around $83 a barrel and West Texas Intermediate near $80. Natural gas and shipping rates also eased. Lower commodity costs reduced input price pressure for exporters and domestic manufacturers, contributing to the Nikkei’s rise.

Japan’s headline consumer price index is expected to increase from 1.4% in April to about 1.6% in May, with core inflation projected to rise similarly. Investors are watching the U.S. Federal Reserve’s policy decision due on Wednesday, where the funds rate is widely expected to remain in a 3.50%–3.75% range. Fed policy will influence global yields, the yen and Japanese asset prices.

Political risks remain after the US–Iran agreement. Israeli leaders, including Prime Minister Benjamin Netanyahu, have expressed opposition and indicated operations against groups such as Hezbollah and Hamas will continue. Analysts warn that further clashes could prompt an Iranian response against Israel and potentially draw the United States back into the region, which would likely push oil and risk premiums higher.

Technical indicators show the Nikkei broke above resistance at ¥69,238 and is trading above the 100-day exponential moving average. The relative strength index is approaching the overbought threshold near 70. Market observers identified ¥70,000 as the next upside target and ¥68,000 as a key support level. The index has risen about 80% over the past 12 months and roughly 35% so far this year. Investors will monitor upcoming economic data, corporate earnings and central bank signals for further direction.