Nikkei gains ground following Wall Street surge; Focus turns to Fed meeting

Nikkei share average: Japan's Nikkei share average kicked off Tuesday on a positive note, mirroring the robust performance seen on Wall Street overnight, as market participants eagerly await the conclusion of the US Federal Reserve's pivotal two-day meeting, which could significantly impact the trajectory of the yen.

By midday break, the Nikkei exhibited a notable rise of 1.38 per cent, reaching 38,459.01, while the broader Topix also made substantial gains, advancing by 2.01 per cent to reach 2,740.54.

Shuji Hosoi, senior strategist at Daiwa Securities, attributed the upward momentum in Japanese stocks to the recent strength in US equities coupled with a decline in US yields, which provided a supportive backdrop for market sentiment.

Monday saw Japan's markets closed, adding to the anticipation surrounding Tuesday's trading session.

Leading the pack, shares of chip-making equipment manufacturer Tokyo Electron climbed by 2.69 per cent, while silicon-wafer producer Shin-Etsu Chemical witnessed a robust surge of 4.4 per cent, and technology investor SoftBank Group recorded a solid gain of 1.8 per cent.

Attention now shifts squarely to the US Federal Reserve's policy meeting, particularly in light of Japan's currency JPY=EBS, which experienced a significant rebound of as much as 5 yen against the dollar from a recent 34-year low of 160.245 on Monday, amid speculation of intervention.

"The success of what the market perceived as intervention yesterday remains uncertain. The yen could swiftly appreciate to 160 against the dollar again if the Fed adopts a hawkish stance following its meeting," noted Daiwa's Hosoi.

While Japanese authorities have not officially confirmed any intervention in the currency market to bolster the yen, market sentiment remains sensitive to potential policy shifts.

In individual stock movements, KFC Holdings witnessed a notable surge of 6.49 per cent following reports in local media suggesting that US buyout fund Carlyle is nearing an acquisition deal with the operator of Kentucky Fried Chicken outlets.

Meanwhile, Sumitomo Corp experienced a significant jump of 7 per cent amid reports indicating that US fund Elliott has accumulated a "large stake" in the trading firm.

Of the 225 components constituting the Nikkei, 188 stocks witnessed gains, while 27 registered declines, underscoring the overall positive sentiment prevailing in the market.

(With Reuters inputs.)