Japan Stocks trade higher on Fed rate cut rates, BOJ meeting in focus

Headline indices of the Japan share market advanced on Thursday, 31 October 2019, as investors risk sentiments bolstered on following gains on the Wall Street overnight after the US Federal Reserve cut interest rates as expected to keep economic expansion on track. However, market gains were capped ahead of a Bank of Japan policy meeting later on Thursday and as of dampening hopes for Donald Trump to sign a phase one trade deal with Chinese President Xi Jinping at APEC summit in Chile which was reportedly cancelled. Around late afternoon, the 225-issue Nikkei Stock Average was up 82.68 points, or 0.36%, to 22,925.80, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange advanced 1.97 points, or 0.12%, at 1,667.87.

Total 15 issues of the 33 industry category of Topix index inclined into positive territory, with Real Estate, Glass & Ceramics Products, Iron & Steel, Fishery, Agriculture & Forestry, Information & Communication, and Pharmaceutical issues being notable gainers, while Marine Transportation, Securities & Commodities Futures, Rubber Products, Electric Power & Gas, and Metal Products issues were notable losers.

The Fed announced its widely expected decision to lower the target range for the federal funds rate by 25 basis points to 1.5% and 1.75%,but dropped a previous reference in its statement to "act as appropriate" to support the economic expansion, which could signal the Fed may hold off on future rate cuts. The quarter point rate cut follows two matching moves at the Fed's meetings in September and July, which marked the first rate cuts in over a decade. In his post-meeting press conference, Fed Chairman Jerome Powell said the current stance of monetary policy is "likely to remain appropriate" as long as "the outlook remains broadly in keeping with our expectations." Powell also told reporters the Fed would need to see a "really significant move up in inflation that's persistent" before the central bank would consider raising interest rates.

On the trade war front, Chilean President Sebastian Pinera was canceling the APEC summit next month, removing hopes for Donald Trump meeting with Chinese President Xi Jinping, where a phase one trade deal might be signed.

Shares of Apple suppliers mostly rose, after the Cupertino-based tech giant reported better than expected fourth quarter earnings on Wednesday. Sharp's stock advanced 0.5% and Kyocera added 1.4%.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, was little changed against greenback on Thursday, ahead of Bank of Japan policy meeting later on Thursday. The BOJ is expected to keep its ultra-easy monetary policy in place, but the decision could be a close call due to hopes that progress in scaling back a US-China trade dispute will give it room to save its dwindling policy tools. The Japanese yen traded at 108.82 against the dollar.

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