^{Photo: The Japan Times}

Japan’s Market Soars to Record Levels

Japan’s benchmark Nikkei 225 index climbed 1.13% on Thursday, touching a new all-time high, driven by strong gains in the real estate and technology sectors. The rally comes as global investors respond to the Federal Reserve’s widely anticipated interest rate cut on Wednesday.

Among the top performers on the Nikkei:

• Resonac Holdings surged over 10%, buoyed by robust demand in the chemical sector.
• Screen Holdings, a major semiconductor equipment maker, advanced 4.3%, reflecting optimism over rising chip demand.
• Kirin Holdings climbed 4.3%, supported by solid domestic beverage sales and improving export margins.

Chip-related stocks were another bright spot:
Advantest rose 3.54%, Tokyo Electron jumped 4.54%, and Samsung Electronics added 2%, signaling growing confidence in the region’s semiconductor outlook.

Asia-Pacific Markets See Mixed Movements

Elsewhere in the region, market performance was more fragmented as investors digested the Fed’s move:

• South Korea’s Kospi gained 0.96%, supported by tech shares like SK Hynix, which jumped 5.5% after a report suggested China has barred Nvidia’s AI chips—potentially boosting demand for regional memory suppliers.
• Taiwan’s TSMC rose 0.79%, reflecting its critical role in producing Nvidia’s high-performance GPUs.
• Australia’s S&P/ASX 200 fell 0.51%, weighed down by a steep 11% plunge in Santos shares to A$6.78. The drop came after Abu Dhabi National Oil Company (ADNOC) withdrew its $18.7 billion takeover offer amid valuation disputes.
• Hong Kong’s Hang Seng Index slipped 0.17%, while China’s CSI 300 edged down 0.23%, as concerns lingered about slowing domestic demand and ongoing regulatory pressures.

Central Banks in Focus: BOJ and the Fed

The Bank of Japan (BOJ) kicked off its two-day policy meeting on Thursday, with most economists expecting rates to remain unchanged for now. However, HSBC analysts forecast a 25-basis-point rate hike by October, which would push the policy rate to 0.75%, citing Japan’s stronger-than-expected second-quarter GDP growth and reduced tariff risks following a U.S. trade deal.

The U.S. Federal Reserve’s decision to trim its benchmark rate was framed by Fed Chair Jerome Powell as a “risk management cut” rather than an emergency response to economic weakness. The central bank signaled two more cuts are likely before year-end, with additional adjustments in 2026 and 2027 and no cuts projected for 2028.

Wall Street Reacts to Rate Cut

On Wall Street, markets showed mixed reactions after an initial surge faded:

• The Dow Jones Industrial Average closed up 260.42 points (0.6%) at 46,018.32, briefly touching a record high.
• The S&P 500 slipped 0.1% to 6,600.35, while the Nasdaq Composite fell 0.3% to 22,261.33 after tech stocks gave back earlier gains.

U.S. stock futures edged slightly higher in early Thursday trading, as investors continue to gauge how the Fed’s more accommodative stance will impact corporate earnings, inflation, and labor markets in the months ahead.

Outlook: Optimism Meets Caution

Analysts warn that while rate cuts can provide short-term relief for equities, they may also signal caution about future economic growth.

“The Fed is walking a tightrope. They see stagflation risks—higher inflation and a cooling job market—which is never ideal for financial assets,” said Jack McIntyre, Portfolio Manager at Brandywine Global.

With Japan’s Nikkei at record highs, Asian chipmakers gaining ground, and central bank policies in flux, global investors are navigating a complex but opportunity-rich environment—where caution and agility may prove just as valuable as optimism.