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Japanese Shares Headed for August Gain as Yen Drops on Fed Bets
(Bloomberg) -- Japanese shares rose, with the benchmark stock index set to wipe out losses for the month, after the yen weakened for a fifth day on bets the Federal Reserve will move to raise interest rates this year.
Banks and carmakers led gains on the Topix index as of 9:04 a.m. in Tokyo, putting the measure on course for a 0.1 percent advance in August, while the yen fell 0.8 percent against the dollar this month. Fed’s Vice Chairman Stanley Fischer said on Tuesday that any rate increase will be data dependent, following last week’s remarks from Fed Chair Janet Yellen that the case for tighter monetary policy has strengthened. Traders put the likelihood of a U.S. rate hike by December at 59 percent in the futures market, up from 36 percent at the start of of the month.
Security | Percent Change | Price |
|---|---|---|
Topix | +0.9% | 1,324.59 |
Nikkei 225 | +0.8% | 16,863.88 |
Yen-Dollar | +0.0% | 102.93 |
“The yen has begun to fully price in the possibility of a U.S. rate hike,” said Chihiro Ohta, a senior strategist with SMBC Nikko Securities Inc. “Investors were wary over what a 100-yen-per-dollar level would do to corporate earnings, but with the yen near the 103 level, those concerns will be alleviated.”
Traders put the chance of a rate increase as early as September at 34 percent, according to Bloomberg data. “Fischer’s comments aren’t different from what he has said previously, but the reiteration of his stance may encourage some to further weigh odds of a September hike,” Ohta said.
Futures on the S&P 500 Index were little changed. The underlying measure slipped 0.2 percent on Tuesday ahead of a slew of economic data due this week including manufacturing on Thursday and a payrolls report on Friday.
To contact the reporters on this story: Min Jeong Lee in Tokyo at mlee754@bloomberg.net, Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Anna Kitanaka, Tom Redmond
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