Investors appeared relieved that the Bank of Japan avoided a sharper rate increase, according to Susannah Streeter of Wealth Club. The central bank lifted its benchmark rate to 1 percent from 0.75 percent, the highest level in three decades, aiming to prevent energy price increases from spreading further through the economy. The decision, though anticipated, marks a notable shift in Japanese monetary policy as borrowing costs reach levels unseen since 1995. Markets welcomed the measured approach, with some traders having priced in a larger move. Japanese stocks advanced, and the Nikkei index closed at a record 69,404.5 points after briefly surpassing 70,000. Other Asia-Pacific markets also gained on optimism surrounding the US-Iran peace agreement. Thames Water edged closer to possible nationalization after ministers formally raised objections to a proposed 10 billion pound rescue package from creditors. Environment Secretary Emma Reynolds wrote to regulator Ofwat expressing concerns that the offer was insufficient given years of operational shortcomings. Supporters of special administration argue it would allow a clean break by requiring investors to absorb losses and enabling a debt-free sale. Under the creditor plan, 3.35 billion pounds of new equity would be injected and roughly one-third of debt written off, while seeking extended deadlines on pollution standards to fund network upgrades. The intervention follows calls from Manchester mayor Andy Burnham for nationalization ahead of a local by-election. If approved, the deal would give influence to US hedge fund manager Paul Singer. The Bank of Japan cited rapid pass-through of higher oil costs by firms as justification for the rate rise, the second by a G7 central bank since the Iran conflict began. Officials noted that downside risks to growth had eased following government support for households facing elevated fuel expenses.
