Andrea Innocenti The Tokyo Stock Exchange began trading in positive territory Wednesday morning , driven primarily by buying in the technology sector. The move comes as traders await tomorrow 's Bank of Japan (BoJ) decision, which is expected to define the future of Japan's monetary policy.
Il Nikkei gains nearly 1% on falling technology and oil
The benchmark Nikkei index closed the session up 0,98% , reaching 64.548,77 points, up 625 points from the previous close. Energy played a key role: oil prices continued to decline, easing inflationary pressures on production costs and allowing investors to redirect capital towards technology stocks, where companies like SoftBank have seen significant growth.
Yen stable against the dollar but stronger against the euro
In the currency market, the yen held around 155,90 per dollar, following the Federal Reserve 's interest rate hike the previous day. At the same time, the yen showed signs of strengthening against the euro, trading at 178,90 yen per euro.
This trend reflects the caution of operators, who are monitoring both the Fed's moves and the BoJ's outlook, fearing a possible excessive appreciation of the Japanese currency.
BoJ ready to raise benchmark rate to 1,25%
According to circulating information, the BoJ intends to raise its key interest rate from the current 1,00% to 1,25% during its Monetary Policy Committee meeting on September 17-18. The stated goal is to contain inflationary pressures in a context of rising crude oil prices and the continued depreciation of the yen. This move would represent the highest level since 1995 and would mark a new pace of rate tightening, with increases expected every three months instead of every six.
Kazuo Ueda's role in the decision
BoJ Governor Kazuo Ueda , along with other committee members, will present the proposed rate hike and seek approval from a majority of the nine members. The decision to raise the rate so sharply, following the last increase in June, is seen as an urgent response to recent tensions in energy prices and the yen's domestic valuation.
International context: rising dollar and tensions over oil
Meanwhile, the US dollar gained ground, approaching two-week highs. The DXY index stands at 99,55, boosted by higher 10-year Treasury yields, now above the psychological 5% threshold for the first time. Furthermore, oil prices reached $107 a barrel, their highest level in four months, following the Iranian- backed Houthi attacks on Saudi Arabia and the breakdown of talks between Iran and the Gulf states. These factors are fueling inflation fears and increasing the likelihood of a further Fed rate hike, estimated at 93% by the CME's FedWatch tool.
Japanese stocks react: SoftBank, Kioxia and the chip sector
In stocks, SoftBank Group jumped 9,13% after a sharp decline the previous day, recovering some of the losses suffered by the artificial intelligence sector. Shares of memory manufacturer Kioxia also rose 2,73%, while chipmakers Advantest and Tokyo Electron posted gains of 0,8% and 0,33%, respectively. Conversely, banking stocks such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group closed lower, down 0,83% and 1,98%.
Speculators' positioning on the yen
Market sentiment toward the yen is evolving: speculators are returning to net long positions on the Japanese currency for the first time since February, anticipating the Bank of Japan's potential rate hike scheduled for Friday. This shift indicates growing confidence in the central bank's ability to counteract currency devaluation.