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Tokyo stocks open flat after US Fed rate hike

Tokyo stocks open flat after US Fed rate hike

Tokyo: Tokyo stocks opened flat Thursday as investors digested the impact of a US Federal Reserve rate hike and the yen firmed against the dollar following the decision.

The benchmark Nikkei 225 index was up a fraction by 0.05 percent, or 10.96 points, to 21,391.93 in early trade, while the broader Topix index edged down 0.16 percent, or 2.67 points, at 1,713.62.

“A sense of uncertainty still remains over the future course of US monetary policy after the expected rate hike,” SBI Securities said in a commentary.

“A higher yen is seen weighing on exporters,” it added. A higher yen makes Japanese exporters’ goods more expensive in foreign markets and shrinks their repatriated profits.

There may be some bargain-hunting driving the market higher during Thursday’s trade, analysts said.

The dollar changed hands at 105.91 yen in early Asian trade, down from 106.04 yen late Wednesday in New York and 106.33 yen in Tokyo late Tuesday.

The Federal Reserve on Wednesday raised the key lending rate for the first time this year to its highest level in a decade, citing a stronger outlook for US economic growth.

Newly installed Fed Chairman Jerome Powell presided over his first meeting, which raised the federal funds rate to 1.5-1.75 percent.

In his press conference, Powell pointed to the factors that have boosted the economic outlook in recent months.

However, he also acknowledged that central bankers now consider the prospects of a global trade war a “more prominent risk” to the economic outlook.

In Tokyo, some exporters were lower, with automakers Nissan trading down 0.31 percent at 1,116 yen and Toyota down 0.13 percent at 6,844 yen.

Banks were also lower, with Sumitomo Mitsui Financial down 1.51 percent at 4,472 yen and Mitsubishi UFJ Financial down 0.64 percent at 705.5 yen.

But Canon was trading up 2.59 percent at 3,958 yen after falling for five days.

AFP