Tokyo: Nikkei snaps 4-day losing run on Wall Street gains after Fed move

JAPAN’S Nikkei share average snapped a 4-day losing streak on Thursday (Jun 16), tracking overnight Wall Street strength, after the Federal Reserve in an expected move hiked interest rate by 75 basis points, as it tries to rein in US inflation.

However, a murky outlook for the global economy amid continued risks from sharply tighter global monetary policy weighed on investor minds, pulling the benchmark stock gauge well off early highs.

The Nikkei ended the day up 0.4 per cent at 26,431.20, rebounding from its lowest close since May 12, but that was near the day’s lows after the index slid gradually from mid-morning, when it touched a high of 26,947.70.

Traders said profit taking kicked in once the Nikkei approached the psychological 27,000 mark.

The broader Topix gained 0.64 per cent to 1,867.81.

The US S&P 500 index gained 1.45 per cent overnight, but was set to give some of that back on Thursday with e-mini futures pointing to a 0.46 per cent decline at the reopen.

Fed Chair Jerome Powell said that a 75 bp increase “seemed like the right thing to do at this meeting”, but added that hikes of that size, the biggest since 1994, were not likely to be “common”.

However, he flagged that the resulting slowdown from tighter policy was likely to lead to a rise in unemployment.

“The uncertainty surrounding US monetary policy and the economic outlook have not gone away, and market volatility is likely to remain, so in that environment you can’t just jump back in and buy stocks,” said Koji Toda, a fund manager at Resona Asset Management.

SEE ALSO

Asia: Markets track Wall Street rally as traders cheer 'dovish' Federal Reserve hike

“It doesn’t feel like there are new longs.”

Of the Nikkei’s 225 components, 167 gained versus 52 that fell, with 6 flat.

Consumer cyclicals was the best performing sector, up 1.82 per cent. Basic materials was the only sector to fall, slipping 0.13 per cent.

Among heavyweight movers, shares of clothing brand Uniqlo’s owner Fast Retailing gained 1.44 per cent, and Toyota Motor jumped 2.88 per cent. Sony Group added 1.53 per cent. REUTERS