TOKYO: Tokyo shares closed higher Thursday, trailing gains on Wall Street and rebounding from sharp losses the previous day on worries about US inflation.
The benchmark Nikkei 225 index added 0.21 percent, or 57.29 points, to 27,875.91, while the broader Topix index ended up 0.15 percent, or 2.97 points, at 1,950.43.
The US market provided cues, after investors there bought back shares following Tuesday’s sell-offs on higher-than-expected US inflation data.
Still, investors in Tokyo “were cautious about the accelerating of future US rate hikes”, as Fed officials reiterated their resolve to fight inflation even at the risk of causing some economic pain, Mizuho Securities said in a note.
Players will continue to look to US data to gauge the trend of Tokyo shares going forward, analysts said.
In the immediate future, players are focused on the next US Federal Open Market Committee, slated for Tuesday and Wednesday.
Many analysts believe the US central bank will announce a 75 basis-point rate hike, but some speculate that a 100-point hike is now possible.
Yen under pressure
Investors are also continuing to digest active attempts by top Japanese officials to alleviate the dollar’s pressure on the yen.
The Bank of Japan has kept its super-easy monetary policy to safeguard Japan’s fragile economy. But that has made the yen unattractive relative to other major currencies, as the US Federal Reserve and other central banks hike rates to fight inflation.
The dollar stood at 143.58 yen in Tokyo, compared with 142.20 yen in New York overnight.
It hovered near 145 yen Wednesday morning in Tokyo, before a series of senior government officials began hinting at the possibility of stepping into the market to prop up the yen.
Reports of a central bank rate check helped firm up the yen.
Interventions in the past have proven that these moves are “unlikely to have a longer lasting effect”, said Rodrigo Catril of National Australia Bank.
Yen under pressure
“There are clear fundamental reasons weighing on the Japanese yen today,” he added, referring to Japan’s easy monetary policy.The depreciation of the yen has inflated the value of imports for Japan.
The finance ministry said Japan logged a record trade deficit of 2.8 trillion yen ($19.7 billion) in August, as the prices of oil, coal and liquefied natural gas surged.
Among major shares, automakers were mixed with Toyota gaining 0.1 percent to 2,040 yen and Nissan rallying 1.5 percent to 546.4 yen while Honda slipped 0.6 percent to 3,577 yen.
Sony Group ended up 0.9 percent at 10,470 yen, Panasonic advanced 1.4 percent to 1,130 yen, and Nintendo rallied 1.7 percent to 62,400 yen.