Business / Financial Markets | TSE DATA & REPORT

Nikkei turns higher on U.S. rally after Fed rate cut

JIJI

The benchmark Nikkei stock average turned higher on Thursday, tracking an overnight rally in U.S. equities after an interest rate cut by the U.S. Federal Reserve.

The 225-issue Nikkei average rose 83.92 points, or 0.37 percent, to end at 22,927.04 on the Tokyo Stock Exchange, after losing 131.01 points on Wednesday.

The Topix index of all issues listed on the TSE first section edged up 1.11 points, or 0.07 percent, to 1,667.01. It rose 3.22 points the previous day.

The Nikkei was buoyant throughout the session, after the Fed cut interest rates by 0.25 percentage point, as widely expected, at its two-day Federal Open Market Committee meeting through Wednesday, and Fed Chairman Jerome Powell suggested at a news conference afterward that, although a further interest rate cut may not occur in the near future, a rate hike is also unlikely anytime soon, brokers said.

The key price gauge’s rise was also supported by gains in heavily weighted components Fast Retailing and SoftBank Group, which pushed up the Nikkei by a total of over 60 points.

Meanwhile, the Topix index wobbled around the previous day’s closing level, weighed down by profit-taking after the recent bullish run.

The Tokyo market reacted little to the Bank of Japan’s suggestion of a possible interest rate cut in the future, after a two-day policy-setting meeting through Thursday.

“After the FOMC meeting, and the BOJ meeting, where no fresh monetary easing measures were taken, investors digested a batch of earnings reports from major Japanese companies,” said Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co.

A brokerage house official offered a view that exchange-traded fund purchases by the BOJ may have driven up the Topix to the positive side in the afternoon.

Despite the advances of the Nikkei and the Topix, falling issues outnumbered rising ones 1,145 to 935, while 75 issues were unchanged in the TSE’s first section.

Volume decreased to 1.46 billion shares from Wednesday’s 1.79 billion shares.

Realtors attracted purchases, with Mitsui Fudosan rising 2.13 percent and Mitsubishi Estate 1.86 percent.

Technology giant Sony gained ground thanks to better-than-expected earnings for April to September.

Among other major winners were daily goods maker Kao and optical equipment-maker Olympus.

By contrast, financials such as mega-bank group Mitsubishi UFJ and insurer Dai-ichi Life met with selling due to a drop in U.S. long-term interest rates.

Mitsubishi Electric fell after announcing a weaker-than-expected operating profit for April to September.

Also on the negative side were drugmaker Eisai and construction machinery-maker Komatsu.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average gained 110 points to end at 22,950.

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