Nikkei rises on hopes of dovish Fed, weak oil prices

Reuters Tokyo | Updated on March 12, 2018 Published on December 17, 2014

Japanese stocks rose on Wednesday as hopes of a continuation of the US Federal Reserve’s dovish stance on rates helped exporter shares brush off a stronger yen, and chart support staunched the Nikkei’s recent losses.

The Nikkei benchmark ticked up 0.5 per cent to 16,834.53 by 0155 GMT, after quickly recouping slim losses at the open.

On Tuesday, the benchmark had closed at its lowest level since October 31, when the Bank of Japan shocked markets by unexpectedly easing policy.

But traders said the correction has likely run its course, with the Nikkei now propped up by its 50-day moving average of 16,554.52.

“The technicals in the market are the real support for us today,’’ said Gavin Parry, managing director of Parry International Trading.

The Fed’s policy meeting wraps up on Wednesday, and the policy statement is expected at 1900 GMT, with investors looking to see how dovish the US central bank’s stance is on interest rates.

Traders said that sentiment towards Nikkei was boosted by the prospect of soft US inflation lowering the probability of tightening by the Fed.

Plummeting crude oil prices, down by a half since June, have weakened inflation, which aside from providing a dovish influence on the Fed, also helps industrialised nations generally, and will be a boon for Japanese exporters.

“The fall in oil prices is a huge positive for Japan and for industrial countries,’’ said Takashi Hiroki, chief strategist at Monex.

“It’s a plus for American demand, which means a plus for the world.’’

With the rouble falling by as much as a fifth on Tuesday, threatening a repeat of Russia’s 1998 financial crisis, investors became more risk averse, and some turned to the safety of the yen - even though the Japanese currency has been in danger of losing its safe haven status.

Published on December 17, 2014

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