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Business & Finance

Tokyo stocks close higher with eyes on US Fed

  • The dollar fetched 103.56 yen in Asian trade, against 103.61 yen in New York and 104.08 yen in Tokyo late Tuesday.
Published December 16, 2020

TOKYO: Tokyo stocks closed 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 ended up 0.26 percent or 69.56 points at 26,757.40, while the broader Topix index was up 0.27 percent or 4.78 points at 1,786.83 at the close.

"Japanese shares started with rallies following gains in all three key indexes on Wall Street... but profit-taking weighed on the market later," Okasan Online Securities said. "Ahead of the FOMC meeting investors are refraining from active trade."

US central bankers on Tuesday opened a two-day meeting to review how best to support the economy as Covid-19 vaccine rollout gets underway.

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... 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.

A higher yen against the dollar also weighed on the Tokyo market, analysts said.

The dollar fetched 103.56 yen in Asian trade, against 103.61 yen in New York and 104.08 yen in Tokyo late Tuesday.

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

Among major shares in Tokyo, Panasonic rallied 2.50 percent to 1,190 yen after a brokerage firm recommended buying its shares.

Canon gained 1.83 percent to 2,088 yen and Toyota was up 0.95 percent at 7,980 yen.

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