Japan’s Topix gauge touches record high in tentative trade before Fed, BOJ

TOKYO: Japan’s broad Topix gauge of shares touched a record high before turning lower in tentative trading on Wednesday, as investors awaited key central bank decisions at home and abroad.

The Topix reached an unprecedented 3,408.99 in early trading before losing steam and was last down 0.2%.

The blue-chip Nikkei 225 Index slid 0.3% to 50,481.99.

US shares were broadly lower overnight on expectation that the Federal Reserve would take a hawkish tone even if it cuts interest rates later on Wednesday.

The Fed is widely expected to make a quarter-percentage-point cut despite inflation still running above the central bank’s 2% target.

Meanwhile, the Bank of Japan has been dropping hints that it is preparing to raise its key policy rate next week to tame inflation and declines in the yen.

“The weak yen environment appears to be the main driver of strength for the broad Japanese stock market today,” said Nomura Securities strategist Wataru Akiyama.

“Once the market has largely priced in this slowdown in the Fed’s rate-cut pace, the yen’s depreciation is likely to stabilise,” he said.

“Consequently, the rise in the Japanese stock market, including the Nikkei, depends on this continuing yen depreciation.”

The weaker yen acted as a tailwind for automakers, with Honda Motor rising 3.3% and Toyota Motor up 1.4%.

There were 130 advancers on the Nikkei against 92 decliners.

The largest gainers were DOWA Holdings, up 6.7%, followed by Mitsui Kinzoku, a major supplier in the artificial intelligence sector that jumped 4.4%.

The largest losers were drugmaker Shionogi, down 4%, followed by food additive maker Ajinomoto, which slid 3.4%.