BUSINESS Japan's Nikkei ends higher on Wall Street's gains, yen's weakness in focus

BUSINESS

Japan's Nikkei ends higher on Wall Street's gains, yen's weakness in focus

Xinhua

19:04, October 19, 2022

File photo: Xinhua

TOKYO, Oct. 19 (Xinhua) -- Japan's Nikkei closed higher Wednesday, tracking gains on Wall Street overnight, as solid corporate earnings from bellwethers lifted the market mood.

But despite giving exporters a boost, the yen's persistent weakness against the U.S. dollar remained a cause for concern Wednesday as financial authorities here said they are poised to intervene in the currency markets again as the U.S. central bank pushes ahead with its aggressive rate hikes despite fears of a U.S. recession.

The 225-issue Nikkei Stock Average gained 101.24 points, or 0.37 percent, from Tuesday to close the day at 27,257.38.

The broader Topix index, meanwhile, added 3.62 points, or 0.19 percent, to finish at 1,905.06.

Local dealers said that stocks here have been steady in comparison to their U.S. peers and would stay that way in the near term, despite the yen's persistent weakness against the U.S. dollar.

"Japanese stocks have been fairly steady compared to U.S. stocks," Seiji Arai, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, was quoted as saying.

"Stocks have been performing well in Japan due to the exchange rate. So, even if earnings decline it may not have a big impact on financial results, which is why they can stay firm," said Arai.

Following data showing better-than-expected U.S. industrial output in September, market strategists here said the U.S. Federal Reserve would push ahead with its aggressive interest rate hikes to combat inflation.

As a result, with the Bank of Japan, in stark contrast, sticking to its ultra-loose monetary policy, the interest rate gap between Japan and the U.S. is widening, leading to a persistently weak yen, they explained.

The Japanese currency fell to a new 32-year low of 149.39 against the U.S. dollar on Tuesday in New York, leading to Bank of Japan Governor Haruhiko Kuroda saying Wednesday that the yen's recent rapid and one-sided depreciation is "negative" for the Japanese economy.

"Currencies should move in a stable manner, reflecting economic and financial fundamentals," Kuroda told an upper house budget committee meeting.

"The recent depreciation of the yen is rapid and one-sided. This type of yen weakness makes it difficult for companies to draw up business plans and raises uncertainty so it is negative for the economy and unfavorable," he said.

Japanese Finance Minister Shunichi Suzuki once again warned that authorities here stood poised to intervene in the currency markets again to redress the yen's weakness.

"We are carefully checking foreign exchange movements more frequently. We are ready to take action based on our consistent view," Suzuki said.

While the Japanese yen shifted little against the U.S. dollar during trading hours, as participants remained wary of an open or a "stealth" foray into currency markets by financial authorities here, investment researches said the yen could fall further outside trading hours.

"The yen is likely to depreciate further into the psychologically important 150 level versus the dollar later Wednesday overseas," Takuya Kanda, senior researcher at the Gaitame.com Research Institute, was quoted as saying.

By the close of play, electric power and gas, information and technology, and real estate issues comprised those that gained the most.

Nikkei heavyweights buoyed the broader market, with tech startup investor SoftBank Group jumping 3.7 percent, while Uniqlo clothing chain operator Fast Retailing added 1.1 percent.

Exporters gained on the yen's weakness despite broader concerns about a recession hitting the U.S., with Suzuki Motor rising 1.2 percent, Honda Motor up 0.8 percent, while Tokyo Electron closed 0.9 percent higher.

Utility oriented issues also found favor, with Tokyo Gas Co. Ltd. climbing 2.4 percent, while Tokyo Electric Power Company advanced 2.7 percent.

Bucking the upward trend, Apple parts suppliers here lost ground, following a report the U.S. tech behemoth will slash orders for its iPhone 14 Plus amid concerns of weak demand, with the latest model only recently hitting the shelves.

Issues that rose outpaced those that fell by 1,148 to 607, while 82 ended unchanged.

On the Prime Market on Wednesday, 957.04 million shares changed hands, dropping from Tuesday's volume of 1,106.72 million shares.

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