Foreign Markets

Japan share market finished session with mixed note on Thursday, 02 February 2023, as upward momentum from the prospect of the Fed easing rate increases was offset by the yen's strength.

The 225-issue Nikkei Stock Average index added 55.17 points, or 0.2%, to finish at 27,402.05. The broader Topix index of all First Section issues on the Tokyo Stock Exchange declined 7.06 points, or 0.36%, to 1,965.17.

Market commenced trading with firm footing on tracking Wall Street after the Federal Reserve raised its interest rate by the expected 25 basis points. However, market gains trimmed after remarks by Federal Reserve Chair Jerome Powell fueled speculation the interest rate hike cycle in the United States is nearing its end.

The Federal Reserve extended its fight against high inflation on Wednesday by raising its key interest rate a quarter-point, its eighth hike since March. And the Fed signaled that even though inflation is easing, it remains high enough to require further rate hikes. After a two-day meeting, the Fed said it has decided to raise the target range for the federal funds rate by 25 basis points to 4.50 to 4.75%. The latest interest rate hike comes after the central bank raised rates by 75 basis points in November and by 50 basis points in December.

During his post-meeting press conference, Fed Chair Jerome Powell said the central bank does not believe rates are yet at a sufficiently restrictive policy stance and suggested a couple of more rate hikes will be needed to get to that level. The Fed also said it anticipates ongoing increases in interest rates will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.

Shares of exporters fell on expectations that the stronger yen will reduce their overseas profits when repatriated. Nissan Motor slid 1.9% to 458.9 yen. Construction equipment maker Komatsu slipped 2% to 3,064 yen.

Chip-related shares were higher, tracking overnight gains in the tech-heavy Nasdaq composite index. Chip-manufacturing equipment maker Tokyo Electron rose 2.9% to 47,480 yen. Advantest, a maker of chip-testing devices, jumped 3.7% to 9,920 yen.

CURRENCY NEWS: The yen stood at 128.59 against US dollar, appreciated 0.28% from previous day close of 128.59, after trading in the range between 128.18-128.97.

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