Japan’s Nikkei share average rose to a record close on Tuesday (Jul 9), with chip-related stocks following their US peers higher, as investors awaited testimony from Federal Reserve Chair Jerome Powell for clues on the path of interest rates.
The Nikkei closed 1.96 per cent higher at 41,580.17, after rising as much as 2.4 per cent to a record intraday high of 41,769.35.
“The market expects Powell’s comments will indicate policy easing, which lifted US chip stocks overnight and the Japanese chipmakers tracked the trend,” said Takehiko Masuzawa, trading head of Phillip Securities Japan.
The S&P 500 and Nasdaq notched record closing highs on Monday, with Nvidia rising 2 per cent and Intel rallying more than 6 per cent. The Philadelphia semiconductor index jumped 1.9 per cent.
Powell will deliver two days of testimony before Congress, beginning later in the day with the Senate and followed by the House on Wednesday.
Traders now see a more than 75 per cent chance of an interest rate cut of at least 25 basis points by September, up from last week’s 60 per cent, according to CME’s FedWatch.
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In Japan, chip-making equipment maker Tokyo Electron jumped 3.77 per cent and chip-testing equipment maker Advantest climbed 4.14 per cent.
Uniqlo-brand owner Fast Retailing rose 3.22 per cent.
The Fed rate-cut expectations weighed on Japanese banks, sending the banking index 0.7 per cent lower.
The index for value shares rose 0.52 per cent, while the growth stock index jumped 1.46 per cent.
The broader Topix ended 0.97 per cent higher at 2,895.55, after hitting a record intraday peak of 2,907.21.
Investors were cautious about the possible impact of a sell-off in exchange-traded funds on Wednesday, a move to distribute payouts, which market players estimate to be worth about US$4.66 billion, said Phillip Securities Japan’s Masuzawa.
The Nikkei is overshooting, rising to a level that is not justified by the domestic corporate outlook, said Jun Morita, general manager of the research department at Chibagin Asset Management. REUTERS
