Japan’s Nikkei Ends Lower as Investors Brace for Fed Policy Decision (Update 1)

Reuters

12:57 JST, May 1, 2024 (updated at 16:25 JST)

TOKYO, May 1 (Reuters) – Japan’s Nikkei share average closed lower on Wednesday, with traders maintaining a cautious stance on the first day of the month ahead of the U.S. Federal Reserve’s monetary policy decision.

The Nikkei managed to recoup some of the early losses as investors singled out individual stocks, but finished the day 0.3% lower at 38,274.05.

The broader Topix declined 0.5% to 2729.40.

The Federal Reserve Open Market Committee (FOMC) is widely expected to leave interest rates unchanged at the end of its two-day meeting on Wednesday, as U.S. inflation proves sticky.

While markets have already pared back expectations of a Fed rate cut this year, investors remain wary of how hawkish a message Fed Chair Jerome Powell will send at his press conference.

Large policy rate gap between Japan and the U.S. continues to put pressure on the yen, raising questions on how excessive currency weakness will impact the economy and consumption.

The risk of currency intervention, and suspicion that Tokyo may already have intervened, was also keeping investors on alert.

“In that sense, I don’t think people are going to be very keen to buy stocks while the yen is this weak,” said Hiroshi Namioka, chief strategist at T&D Asset Management.

Of the Nikkei’s 225 constituents, 151 stocks declined versus 72 advancers. Heavyweights Softbank Group lost 1.6% while Uniqlo parent firm Fast Retailing slipped nearly 1%.

Among individual stocks, earning results and share-specific news drew out the starkest winners and losers.

Shares of chip-related equipment maker Lasertec jumped 14.9% after the company published an estimate-beating earnings post market hours on Tuesday.

West Japan Railway gained 8.6% on Wednesday following its decision to buy back 4.1% of its own shares.

JGC Holdings was the largest decliner, falling 11.4% on disappointing revenue forecast.