Japanese stocks turn to losses following the Bank of Japan's hint at raising interest rates.

Japanese stocks erased their early gains on Wednesday to close with marginal losses amid hints from the Deputy Governor of the Bank of Japan about a potential interest rate cut soon. The losses in Japanese stocks were also driven by significant losses in chip-related stocks, which continued to deepen their losses due to declines in their counterparts on Wall Street after the U.S. government decided to impose stricter restrictions on chip and artificial intelligence technology exports. In terms of trading, the main Japanese stock index, the NIKKEI 225, closed the session down by 0.08% at 38,444.58 points, after erasing its early gains which reached 0.78% earlier in the session. Meanwhile, the broader TOPIX index rose by 0.31% to end the session at 2,690.81 points. Most of the losses in Japanese stocks were driven by declines in chip-related stocks, which significantly pressured the NIKKEI index, as shares of Japan's chip testing equipment supplier Advantest fell by 3.45%, becoming the biggest loser on the NIKKEI index. Shares of Tokyo Electron, a chip manufacturing equipment company, also dropped by 1.4%. On another note, Deputy Governor of the Bank of Japan, Ryuzo Himino, stated in his address to business leaders in Yokohama that negative real interest rates cannot be maintained, while Bank of Japan Governor Kazuo Ueda said this morning that the central bank will raise interest rates and adjust the level of monetary support if the improvement in the economy and price conditions continues. In economic news, a Tankan survey showed an improvement in manufacturers' sentiment in January, supported by gains in steel and chemicals. However, uncertainty about Trump's policies kept expectations unchanged. At the same time, Japanese machine orders in December grew at the largest rate in more than two and a half years.