(Bloomberg) — Japanese stocks rose as the yen weakened after Federal Reserve Chair Jerome Powell cautioned against assuming large rate cuts will continue. Investors are awaiting the Bank of Japan’s decision Friday.
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The Topix Index rose 2% to 2,616.87 at the close in Tokyo. Exporters of automobiles and electronics were the biggest contributors to the gauge. Nikkei 225 Stock Average advanced 2.1%.
The yen earlier weakened more than 1% to 143.95 per dollar, after appreciating to 140.45 on the Fed’s decision to cut its benchmark interest rate by a half percentage point. Powell signaled at a press conference following the announcement that it’s not in a rush to ease policy.
“For Japanese equities, it was probably the ideal outcome that there was a large rate cut as expected but the yen didn’t appreciate,” said Rina Oshimo, a senior strategist at Okasan Securities Co. “Since the BOJ decision is expected to remain unchanged, attention is likely to focus on Governor Ueda’s subsequent remarks.”
Economists expect the BOJ to stand pat when its two-day meeting concludes Friday. Japanese stocks tumbled into a bear market in early August after BOJ’s rate hike and Governor Kazuo Ueda’s hawkish stance at his briefing sent the yen higher.
“Export-related stocks are rebounding on a sense of relief and security that the FOMC’s results did not lead to a stronger yen,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management Ltd. Still, investors are still cautious ahead of the BOJ decision, making it difficult to take on large positions, he said.
–With assistance from Haruka Iwai, Yasutaka Tamura and Momoka Yokoyama.
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