TOKYO: Japanese stocks marked slight gains on Tuesday as investors zoned in on this week’s US Federal Reserve and Bank of Japan meetings, where the central banks are expected to reinforce their divergent approaches to tackling inflation.
As markets resumed trading after a national holiday, the Nikkei share index opened 0.8% higher and rose as much as 1.23% before paring gains to finish up 0.44% at 27,688.42. The broader Topix index added 0.45%.
“A lot of investors want to see the results of the FOMC [Federal Open Market Committee] meeting, so they’re likely to adopt a wait-and-see attitude today and tomorrow,” said Hideyuki Suzuki of SBI Securities.
Markets are fully pricing in a Fed rate hike of at least 75 basis points, with an 18% chance seen of a full percentage point rise.
“It would be a negative surprise for the market if a 100 bps rate hike was decided, and the Nikkei share average would likely test lower levels,” said a domestic asset manager.
The Bank of Japan, however, is expected to remain a global outlier by refusing to hike interest rates, even as inflation rises.
Japan on Tuesday reported that core consumer inflation touched a near eight-year high in August.
While the latest core consumer inflation figure of 2.8% is lower than many other countries around the world have seen this year, it marks the fifth straight month above the BOJ’s target of 2%, which has partly been driven by the dramatic slide in the yen.
The Nikkei saw 162 of its 225 constituents mark gains on Tuesday, while 56 fell and seven traded flat. The index’s climb was driven by technology stocks, in line with overnight results from the Nasdaq 100 and the Philadelphia semiconductor index.
Mobile phone operator KDDI Corp had a strong impact, gaining 1.77%, while electrical components manufacturer TDK Corp rose 2.72%.
Other strong tech performers included chipmaking equipment manufacturer Tokyo Electron Ltd and tech conglomerate SoftBank Group Corp, both major contributors to the Nikkei.
Materials manufacturer Unitika Ltd saw the biggest individual rise on the Nikkei, up 7.33%. Marine freight company Kawasaki Kisen Kaisha Ltd notched the largest loss, falling 3.28%.
Healthcare was one of the few sectors to drop overall, tracking overnight losses on Wall Street.
M3 Inc dropped 2.39%, Kyowa Kirin Co Ltd lost 1.85%, and Terumo Corp fell 1.42%.
The real estate sector also weakened. Tokyo Tatemono Co Ltd fell 1.98% and Mitsui Fudosan Co Ltd dropped 1.71%.