Tokyo stocks rebound on buybacks as traders digest Fed anti-inflation pledge
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E-mail Xinhua, August 30, 2022
Tokyo stocks rebounded in relatively quiet trading Tuesday as investors bought back shares that tumbled the previous day after the head of the U.S. Federal Reserve hinted late last week that interest rate hikes will continue for some time to fight inflation.
The 225-issue Nikkei Stock Average advanced 316.62 points, or 1.14 percent, from Monday to finish at 28,195.58.
The broader Topix index, meanwhile, finished 24.28 points, or 1.25 percent, higher at 1,968.38.
On the top-tier Prime Market, gainers were led by mining, oil and coal product, and machinery issues.
The recovery in the stock market came following Japan's benchmark Nikkei average lost 762.42 points on Monday, its biggest single-day fall in more than two months, as some investors expressed concerns about the future health of the U.S. economy.
Stocks tumbled after U.S. Federal Reserve Chairman Jerome Powell indicated Friday that the U.S. central bank will continue a strategy of keeping interest rates elevated to curb surging inflation.
Shingo Ide, chief equity strategist at the NLI Research Institute, said that investors rushed to sell shares on Monday but reflecting back they realized that Powell's remarks were not as hawkish as they first appeared to be and bought them back.
Moreover, expectations that the U.S. central bank would lower borrowing costs once rising prices are tamed underpinned sentiment for the Japanese market, brokers said.
In the currency market, the U.S. dollar hovered mostly around the mid-138 yen range, with some market participants purchasing the unit hoping for a wider interest rate gap between Japan and the U.S. following the hawkish Federal Reserve commentary on Friday.
Meanwhile, traders said others sold the dollar to lock in gains after it hit a one-and-a-half month high of 139.00 yen during Tokyo trading hours on Monday.
The yen's weakness against the dollar boosted some exporters. Hitachi Construction Machinery climbed 1.1 percent, while precision equipment maker Nikon rose 0.9 percent.
Among Prime Market issues on Tuesday, advancers outnumbered decliners 1,542 to 243, while 49 ended the day unchanged.
Trading volume on the Prime Market fell to 998.38 million shares from Monday's 1,073.66 million.
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