Japanese stocks saw a notable increase as the yen depreciated, influenced by Federal Reserve Chair Jerome Powell’s cautious stance on future rate cuts. Investors are now focused on the Bank of Japan’s (BOJ) decision, scheduled for Friday.
As of 10:43 a.m. in Tokyo, the Topix index surged by 2.5%, with gains driven primarily by exporters in the automobile and electronics sectors. The Nikkei 225 Stock Average also rose by 2.5%.
The yen fell over 1% to 143.74 per dollar after initially strengthening to 140.45 following the Fed’s decision to lower its benchmark interest rate by 50 basis points. Powell’s comments during the subsequent press conference indicated that the Fed is not hastening further policy easing.
Rina Oshimo, a senior strategist at Okasan Securities Co., noted, “For Japanese equities, the outcome was favorable—while there was a significant rate cut as anticipated, the yen did not strengthen.” She added that attention is likely to shift to Governor Ueda’s remarks following the BOJ’s decision, which is widely expected to maintain the current policy.
Economists predict that the BOJ will keep its policy unchanged at the conclusion of its two-day meeting on Friday. Japanese stocks had previously fallen into a bear market in early August after the BOJ’s rate hike and Governor Kazuo Ueda’s hawkish comments led to a stronger yen.
Tomo Kinoshita, a global market strategist at Invesco Asset Management Ltd., commented, “Export-related stocks are rebounding as there is relief that the Fed’s actions did not result in a stronger yen.” However, he noted that investor caution remains high ahead of the BOJ’s decision, limiting the ability to make substantial investments.
