Japan's Nikkei stock index rose to a record high on Tuesday, after the Bank of Japan raised interest rates as widely expected, without showing any sign of the need to tighten monetary policy urgently. Japanese government bonds fell after the decision, while the yen maintained slight strength against the dollar.
The Nikkei index rose by 0.2 percent to reach 69,474.95 points by 05:55 GMT, and had earlier jumped by up to 1 percent to reach 70,020.68 points for the first time.
As for the broader Topix index, it fell by 0.4 percent to reach 3,984.30 points, after initially achieving gains following the announcement of monetary policy, and then declining after that. The Bank of Japan's decision came during a period of halt in trading in stocks and bonds, and initially had little impact on the yen, which remained slightly higher at 160.295 yen to the dollar. At the same time, the yen remained below the level of 160 yen to the dollar, which is considered a red line for intervention by Japanese officials.
“The Bank of Japan achieved what the markets expected... but the reaction shows that this was not enough tightening to force the market into a major reassessment of the yen,” said Charo Chanana, chief investment strategist at Saxo.
The central bank is still moving very gradually, and stresses that financial conditions will remain supportive. This is slightly supportive of Japanese stocks; “Because the Bank of Japan is tightening monetary policy, but not in a way that threatens liquidity or profits.”
Among the 225 components of the Nikkei index, the prices of 67 stocks rose compared to a decline of 157 stocks, while the price of one stock remained stable. A number of heavyweight AI stocks had a noticeable impact in supporting the market. Chip testing machine manufacturers excelled; Advantest shares rose by 3.6 percent, as did data center shares. Fujikura shares rose by 8.6 percent and Furukawa Electric shares rose by 4.2 percent.
Bonds decline
For its part, benchmark 10-year Japanese government bond futures fell by 0.50 yen, to 127.76 yen. The 10-year Treasury yield rose 7 basis points to 2.655 percent. Yields rise when bond prices fall. Movements in the rest of the yield curve were more subdued; The two-year bond yield rose by one basis point to 1.405 percent, and the 30-year bond yield rose by 3.5 basis points to 3.78 percent.
Before Tuesday, yields had been declining over the past few weeks from record levels, with inflation fears receding, amid optimism for a near end to the war with Iran. The Bank of Japan indicated in its statement that the growth risks resulting from the conflict in the Middle East have diminished, but price expectations require attention.
The International Monetary Fund stressed the need for the Kazakh authorities to adopt a package of financial discipline measures and strict monetary tightening, with the aim of curbing inflation and firmly returning it towards its target of 5 percent. He stressed that controlling the cash surplus and controlling government spending represent the basic foundation for protecting the gains of economic growth, which is expected to record 4.6 percent in 2026, supported by the current boom in global oil prices and strong domestic demand.
The IMF mission explained, in an official statement issued after the conclusion of its visit to Astana headed by Amina Larich during the period from June 3 to 12, that the growth of real GDP witnessed a temporary slowdown to record 3.7 percent during the first five months of this year, compared to about 6.5 percent by the end of 2025, as a result of the decline in oil production as a result of the force majeure incident that occurred on the Caspian Sea Consortium (CPC) pipelines, noting that The strong performance of the services, transportation, construction, and manufacturing sectors succeeded in absorbing the logistical shock to the energy sector.
Inflation and monetary policy challenges
In terms of price stability, the Fund's statement stressed the need for the Central Bank of Kazakhstan to maintain its tight monetary policy to ensure that inflation rates fall towards its target of 5 percent. Inflation had declined from its peak of 12.9 percent in September 2025 to 10.4 percent last May, which prompted the central bank to reduce interest rates by 100 basis points this June.
The Fund expects inflation to range around 10 percent during the current year, warning of upward risks represented by the acceleration of capital spending and continued adjustments in the prices of utility services during the second half of the year. The Fund praised the measures planned to withdraw excess liquidity, including raising mandatory reserve requirements and increasing central bank securities issuances.
Improved budget and current account surplus
On the financial side, the Fund expected an improvement in the country’s external financial positions supported by new tax reforms. The non-oil fiscal deficit is expected to decline in 2026 with the implementation of updated tax laws, expansion of the tax base, and digitization of financial management.
Estimates also suggest that Kazakhstan's current account will shift from a deficit of 4.1 percent of GDP in 2025 to achieving a marginal surplus during the current year, at a time when international reserves stand at very comfortable levels covering about 10 months of merchandise imports.
The safety of the banking sector and “digital tenge” reforms
The report indicated the soundness of the banking sector’s precautionary indicators. Tighter standards and the activation of capital buffers to counter cyclical fluctuations have contributed to curbing consumer loans, as well as keeping non-performing loans at low levels. The statement noted the adoption of the new banking law, which updated the framework for resolving and addressing banking crises.
In conclusion, the International Monetary Fund urged the authorities in Kazakhstan to move forward with deep structural reforms to enhance productivity, by reducing the state’s sovereign footprint in the economy, stimulating private sector investments, and deepening financial markets. The Fund also praised the use of the country's digital currency, the Digital Tenge, which allows tracking government spending and the National Fund's resources in real time, which increases the efficiency of public finances and protects the economy from the risks of exposure to inflation.
On Tuesday, the German Finance Agency announced its official rejection of UniCredit Bank’s offer to acquire Commerzbank, citing the low value of the offer, in addition to concerns related to what it described as the Italian bank’s hostile approach.
This decision coincides with the approaching end of the initial period of UniCredit’s offer to buy Commerzbank shares, as both parties adhere to their positions in a months-long struggle to control one of the most prominent German banks. The German government owns a 12 percent stake in Commerzbank, which it acquired following the global financial crisis in 2008, and has long opposed UniCredit's attempts to take over the bank, according to Reuters.
The agency said that accepting the offer “was not a financially acceptable option; “It does not include an appropriate premium on Commerzbank’s current share price,” stressing at the same time its support for the independence of the German bank, given its pivotal role in financing medium-sized companies, in addition to its importance in the Frankfurt financial center.
She added, "The continuation of these two roles must be guaranteed in the future."
In a related context, Frankfurt prosecutors announced the launch of a preliminary investigation into the possibility of market manipulation related to the offer, following a criminal complaint filed by the Commerzbank workers’ council, which reached the Public Prosecution on Sunday.
For its part, UniCredit Bank said in a statement that it is aware of these developments, noting that the Public Prosecution’s response “is in line with usual procedures when receiving such complaints.”
Commerzbank shares decline
In financial markets, Commerzbank shares fell on Tuesday below the implied price included in UniCredit's hostile takeover offer, after trading above that level since the offer was launched on May 5.
The offer is scheduled to end on Tuesday, and will be reopened for an additional 15 days, starting on June 20.
Commerzbank's share price reached 36.53 euros by 08:12 GMT, while UniCredit's share reached 76.97 euros.
Based on the exchange ratio of 0.485 new UniCredit shares for every Commerzbank share, the value of the offer is estimated at approximately 37.33 euros per share.
