Nikkei Tops 43,000 for First Time on US Rate-Cut Hopes

Japan's Nikkei 225 index rose above the 43,000 mark for the first time on Wednesday morning, led by Wall Street gains and hopes of an early U.S. rate cut. The Nikkei closed the morning session at 43,301.07, an increase of 582.90 points, or 1.36 percent, from the previous close.

It hit its intraday record high of 43,347.57 at 10:57 a.m. with a rise of 629.40 points.

The wider TOPIX index at the Tokyo Stock Exchange also rose, reaching an intraday record high before it closed the morning at 3,093.85, 27.48 points, or 0.90 percent higher.

Analysts linked the rally to solid buying momentum following U.S. shares rising on Tuesday.

Key Highlights:

• Nikkei 225 breaches 43,000 for the first time, closing the morning at a record 43,301.07
• Broad-based buying driven by Wall Street gains and hopes of an early U.S. Fed rate cut
• Analysts warn of short-term overheating despite strong momentum in technology, exports, and financial stocks

Wall Street's advance was in line with the advance of the U.S. consumer price index (CPI) in July to meet market expectations, supporting hopes that the Federal Reserve would cut interest rates ahead of schedule. "The Tokyo market is benefitting from the wave from the U.S., and hopes for a Fed rate cut are driving broad-based buying," a market analyst said.

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Nonetheless, there were some who cautioned against overenthusiasm. A senior official at a leading securities house warned, "Tokyo stocks can fall anytime. There is a feeling of short-term overheating in the market after its swift recovery till yesterday."

The gains were broad-based, with technology, export stocks, and financial shares spearheading advances. Although optimism is positive in the near term, market observers point out that traders will watch closely for any pointers in policy directions from future U.S. economic data and Fed signals.