(Bloomberg) — Japanese stocks rose as the yen weakened after Federal Reserve Chairman Jerome Powell warned against assuming further deep interest rate cuts, while investors await the Bank of Japan’s decision on Friday.
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The Tokyo Stock Price Index rose 2.5% as of 10:43 a.m. Auto and electronics exporters were the biggest contributors to the index's rise. The Nikkei Stock Average also rose 2.5%.
The yen fell more than 1% to 143.74 yen after rising to 140.45 yen per dollar following the Fed's decision to cut interest rates by half a percentage point. Chairman Powell suggested in a press conference after the announcement that he was in no rush to ease policy.
“For Japanese stocks, it was an ideal outcome that the yen did not appreciate despite the expected large interest rate cut,” said Rina Oshita, senior strategist at Okasan Securities. “Since the BOJ's decision is expected to remain unchanged, attention will likely be focused on Governor Ueda's subsequent comments.”
Economists expect the Bank of Japan to keep interest rates on hold when it finishes its two-day meeting on Friday. Japanese stocks fell into a bear market in early August after the bank's rate hikes and Governor Kazuo Ueda's hawkish tone at news conferences led to a stronger yen.
“Export-related stocks are rebounding due to the sense of relief and security that the FOMC outcome did not lead to a stronger yen,” said Satoshi Kinoshita, global market strategist at Invesco Asset Management. But investors remain cautious ahead of the BOJ decision, making it difficult to take big positions, he said.
–We would like to thank Haruka Iwai and Yasutaka Tamura for their cooperation.
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