Japan Market gains after Fed's rate cut

Headline indices of the Japan share market advanced on Thursday, 19 September 2019, as risk sentiments underpinned after the US Federal Reserve cuts key policy rate for second time this year, with promise to 'act as appropriate' to sustain expansion. Also, the market was also underpinned here by a comparatively weak yen. Market gains were however limited after the Bank of Japan left its base rate unchanged on Thursday just hours after the Federal Reserve cut the fed funds rate for the second time and weeks after the European Central Bank restarted it quantitative easing bond purchases. Around late afternoon, the 225-issue Nikkei Stock Average advanced 117.03 points, or 0.53%, to 22,077.74, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 10.75 points, or 0.67%, at 1,617.37.

Total 30 out of 33 industry category of Topix index advanced into positive territory, with Textiles & Apparels, Electric Power & Gas, Services, Construction, Land Transportation, and Securities & Commodities Futures issues being notable gainers.

The US central bank's Federal Open Market Committee on Wednesday reduced its benchmark interest rate by 25 basis points to a range of 1.75% to 2%, the second cut this year, in a bid to stimulate the economy amid growing global headwinds. The central bank also widened the gap between the interest it pays banks on excess reserves and the top of its policy rate range, a step taken to smooth out problems in money markets that prompted a market intervention by the New York Fed this week. Projections show Fed officials are divided on the path for rates but do not expect additional cuts this year or next, disappointing a market that had been looking for further easing.

ECONOMIC NEWS: Bank of Japan keeps monetary policy on hold -- The Bank of Japan (BoJ) kept monetary policy steady on Thursday. In an expected move, the BoJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%. The decision on maintaining its interest rate targets was made by a 7-2 vote, with board members Goushi Kataoka and Yutaka Harada dissenting. In its statement on monetary policy, the Japanese bank said "it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost," in reference to the BoJ's ever elusive 2% inflation target. "The Bank will re-examine economic and price developments at the next (Monetary Policy Meeting), when it updates the outlook for economic activity and prices," the BoJ said.

CURRENCY NEWS: The Japanese yen little changed against greenback on Thursday. The Japanese yen, often seen as a safe-haven currency in times of turmoil, traded at 107.85 against the dollar after seeing an earlier low of 108.46.

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