Japanese Stocks Rise, Sentiment Boosted by Fed Cut Speculation
Japanese indexes rose in early trading on Monday (August 25th), following Wall Street's rally following Jerome Powell's dovish comments at Jackson Hole. The Topix index rose 0.8% and the Nikkei 225 rose 1.2%, led by the technology, automotive, and trading house sectors. This rise was also supported by the Dow Jones Industrial Average's record high on Friday after the market increased bets on a US interest rate cut.
Although the yen strengthened 1% on Friday and has since stabilized, market participants believe the impact on stocks will be limited because valuations were already under pressure ahead of Jackson Hole, providing room for a rebound. Improved global sentiment following Powell's speech was the dominant factor in the early Tokyo session.
Among the constituents, SoftBank, Advantest, and Keyence were among the largest contributors to the Topix's rise. Investors returned to technology stocks, assuming that lower US interest rates would trigger capital inflows into Japan's growth sectors. This expectation led to interest rate-sensitive and growth stocks leading the gains.
On the domestic policy front, BOJ Governor Kazuo Ueda stated that a tight labor market has the potential to maintain upward wage pressure, keeping speculation of further BOJ interest rate hikes alive this year. For the market, the combination of external factors (the Fed) and the prospect of gradual BOJ normalization will determine the direction of the Nikkei/Topix in the near term (ayu)
Source: Newsmaker.id
