Nikkei 225 Breaches 45,000-Point Mark on Fed Rate Cut Hopes

On September 16, the Japanese stock market resumed trading after a short holiday. Driven by heightened expectations of a Federal Reserve rate cut and other favorable factors, the market continued its upward trend. The Nikkei 225 index breached the 45,000-point mark shortly after the opening bell, marking the first time in history it has surpassed this threshold.

During the morning session, the Nikkei 225 index peaked at 45,055.38 points before retreating slightly below the 45,000-point level. This surge follows a series of record highs achieved by the index last week, including its first close above 44,000 points on September 9.

The anticipation of a Federal Reserve rate cut in September has been a significant driver of the recent rally in Japanese stocks. The Federal Open Market Committee (FOMC) is scheduled to meet on September 16 and 17, with market participants widely expecting a rate reduction. This optimism has not only boosted Japanese equities but also contributed to strong performances in other Asian markets, including South Korea, which also hit a record high this week.

Improved trade prospects have further fueled the upward momentum in Japanese stocks. In July, after several rounds of negotiations, Japan and the United States reached a trade agreement that eliminated trade uncertainties and bolstered market confidence in Japanese exporters. The agreement was formally implemented on September 4.

Additionally, positive policy expectations have acted as a catalyst for the stock market's rise. Following the resignation of Prime Minister on September 7, several figures, including a former economic security minister and interior minister, have emerged as potential candidates for the leadership of the Liberal Democratic Party. Market participants view these candidates as likely to adopt expansionary fiscal and monetary policies, which could include increased government spending and more substantial fiscal stimulus measures. Such policies are expected to invigorate the Japanese economy and, consequently, drive further gains in the stock market.