Tokyo Stocks Likely to Be Determined by Outcome of Fed’s Policy-Setting Meeting

Jiji Press

16:41 JST, March 18, 2023

TOKYO (Jiji Press) — The direction of the Tokyo stock market this week is likely to be determined by the outcome of the U.S. Federal Reserve’s policy-setting meeting, market sources said Friday.

Last week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s Prime section plunged 810.18 points, or 2.88%, to end at 27,333.79.

The market suffered losses amid a risk-averse mood sparked by the March 10 collapse of Silicon Valley Bank and worsened by rekindled financial woes at Swiss financial giant Credit Swiss.

Meanwhile, a series of response measures helped alleviate fears of the spread of bank failures to some extent by Friday, helping the Tokyo market to stage a rebound on the day.

This week, the Nikkei average is expected to move mainly between 26,800 and 27,800, analysts and brokers said. The Tokyo market will be closed Tuesday for a national holiday.

Stocks are unlikely to show wild swings early in the week amid a wait-and-see mood ahead of the Fed’s two-day Federal Open Market Committee meeting through Wednesday and Fed Chairman Jerome Powell’s press conference after the meeting, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

On the other hand, Ichikawa stated that the possibility of a sell-off cannot be ruled out as fears of a banking crisis still remain, suggesting that news of another bank failure or financial issues at banks would trigger hefty selling.

Unless worries about the health of the banking system are reignited, the Tokyo market is expected to gradually extend gains despite profit-taking, aided by buying on the dip, said Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co.

“Selling to lock in profits will gather steam if the Nikkei rises to around 27,500,” he also said.