Tokyo stocks open higher with eyes on US Fed

TOKYO: Tokyo stocks opened higher on Wednesday as investors took heart from rallies on Wall Street with eyes on the US Federal Reserve's policy decision later in the day.

The benchmark Nikkei 225 index advanced 0.67 percent, or 178.58 points, to 26,866.42 in early trade, while the broader Topix index was up 0.72 percent, or 12.80 points, at 1,794.85.

"Even though investors are reluctant to engage in active trading ahead of the FOMC meeting, Japanese shares are seen starting with gains" following rallies on Wall Street, senior analyst Toshiyuki Kanayama of Monex said in a commentary, referring to the policy-setting US Federal Open Markets Committee.

US central bankers on Tuesday opened a two-day meeting to review how best to support the economy as the Covid-19 vaccine rollout got under way. But with the benchmark lending rate already at zero, there is little left for the Fed to do.

At most, economists say FOMC officials could provide more information on potentially increasing the pace of bond purchases above the current $120 billion a month.

"No change to the Fed funds rate is universally expected," with the Fed "continuing to eschew the policy notion of negative interest rate policy," said Rodrigo Catril, senior analyst at National Australia Bank.

"Any further stimulus would likely come from a change to its forward guidance," he added in a note.

A higher yen against the dollar is weighing on the upside of the Tokyo market, analysts said.

The dollar fetched 103.67 yen in early Asian trade, against 103.61 yen in New York and 104.08 yen in Tokyo late Tuesday.

Japan has booked a trade surplus of 366.8 billion yen ($3.5 billion) in November, the fifth consecutive monthly surplus, according to data released by the finance ministry before the opening bell, which prompted little reaction from investors.

Among major shares in Tokyo, Panasonic rallied 3.01 percent to 1,196 yen after a brokerage firm recommended buying its shares, while some other exporters were also higher, with Canon trading up 2.05 percent at 2,092.5 yen and Toyota up 1.15 percent at 7,996 yen.

On Wall Street, the Dow ended up 1.1 percent to 30,199.31 while the tech-rich Nasdaq powered to a fresh record gaining 1.3 percent, and the broad-based S&P 500 rose 1.3 percent.