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Nikkei Rebounds Over 250 Yen on Fed Rate-Cut Speculation

Fed rate-cut expectations lifted the Nikkei by over 250 yen on August 5, reinforcing how yen strength, US tariff risks, currency swings keep Tokyo markets on edge.

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Overview

  • The Nikkei 225 climbed 254.29 yen in the August 5 morning session to 40,544.99, recovering from a more than 900-yen drop two days earlier.
  • Disappointing US July nonfarm payrolls and downward revisions for May and June fueled speculation that the Federal Reserve could cut rates as early as September.
  • A sharp yen appreciation, which saw the currency strengthen by more than 2.8 yen against the dollar, continues to pressure export-oriented and financial stocks.
  • New York stocks rallied with a 585-point Dow gain on August 4, setting the stage for Tokyo’s bounce on renewed risk appetite.
  • Market sentiment remains fragile as investors weigh the narrowing US-Japan interest-rate gap and potential impacts of US tariffs on Japanese exporters.