Mt. Fuji and Shinjuku skyline in Tokyo, Friday, February 14, 2025. Photographer: Kiyoshi Ota/Bloomberg via Getty Images
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Japanese Nikkei Stock Average Stocks rose more than 2% on Wednesday, hitting a record high above 51,000 for the first time on renewed optimism about the Japan-U.S. trade relationship and expectations for further interest rate cuts from the U.S. Federal Reserve.
It rose after US President Donald Trump and Japanese Prime Minister Sanae Takaichi signed a new rare earth framework on Tuesday. Markets also gained confidence that the Fed will cut interest rates by 25 basis points for the second year in a row to support slowing growth.
President Trump’s visit marked his first meeting with Takaichi, who took office earlier this month. He also met with Emperor Naruhito at the Imperial Palace.
Takaichi’s appointment as prime minister will shift the long-ruling Liberal Democratic Party to a more economically liberal, socially conservative and hawkish security policy, Fitch Solutions firm GeoQuant said in a note.
Markets are pricing in a nearly 100% chance that the Federal Open Market Committee will follow up on September’s rate cut with another quarter-point rate cut, pushing the federal funds rate into the 3.75% to 4.00% range.
“If[Fed Chairman Jerome Powell]turns dovish, it would increase bets on future Fed rate cuts and give further fuel to market momentum,” veteran investor Louis Navellier wrote in the Daily Note.
The federal funds rate is set by the Federal Open Market Committee and is the interest rate that banks charge each other for overnight loans. Although they don’t directly affect consumers, the Fed’s actions often affect borrowing costs for mortgages, credit cards and other loans.
On the other hand, TOPIX fell by 0.15%. South Korea’s Kospi rose 1.77%, while the small-cap Kosdaq fell 0.28%.
India’s Nifty 50 rose 0.44%.
Australia’s S&P/ASX 200 fell 0.96%. Australian consumer prices rose 3.2% in the third quarter, the biggest rise in more than a year, the Australian Bureau of Statistics said on Wednesday. The increase was higher than the 2.1% rise in the second quarter and was also higher than the 3% expected by economists polled by Reuters.
The CSI of 300 species on the mainland increased by about 1%.
Hong Kong markets are closed for public holidays.
In the US market last night, all three major stock averages closed higher. The S&P 500 rose 0.23% to close at 6,890.89. On this day, it exceeded the 6,900 level for the first time during the day.
The Nasdaq Composite Index rose 0.80% to end at 23,827.49, and the Dow Jones Industrial Average rose 161.78 points, or 0.34%, to settle at 47,706.37. In addition to their closing highs, the tech-heavy Nasdaq and Dow 30 also hit new intraday highs, along with the broader S&P 500.
—CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
