BANGKOK – Japan’s benchmark Nikkei 225 surged Thursday to a record close of 40,913.65, while most other major world markets also advanced.
Investors worldwide are keen to see the Federal Reserve cut rates that it has been keeping at two-decade highs to slow growth and tame inflation, and hopes have been reviving that price pressures are easing enough to make that possible.
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In early European trading, Germany's DAX rose 0.2% to 18,586.00 and the CAC 40 in Paris gained 0.8% to 7,694.52.
In London, the FTSE 100 was up 0.7% at 8,228.90. British voters were choosing a new government in a parliamentary election Thursday that is widely expected to bring the opposition Labour Party to power.
The future for the S&P 500 was up 0.1% while that for the Dow Jones Industrial Average gained 0.2%.
The Nikkei 225 gained 0.8% to 40,913.65, with buying of automakers' shares and other export oriented stocks pushing the benchmark to an all-time high. The Nikkei 225’s all-time high during intraday trading is 41,087.75, on March 22. Its previous record close was 40,888.43, also set on March 22.
The index surpassed its longstanding record of 38,915.87, set on Dec. 29, 1989, in February.
Toyota Motor Corp.’s shares jumped 2% and Honda Motor Co. climbed 3%. Nissan Motor Corp. rallied 4.5% and shares in computer testing equipment maker Advantest Corp. gained 2.1%.
Investors have piled into the Japanese market partly due to the cheapness of the Japanese yen, which is trading at 34-year lows against the dollar. A weak yen tends to push the profits of exporters higher when they are repatriated to Japan.
Changes in regulations on investment accounts have also boosted share purchases.
The Nikkei 225 index has gained 22.4% so far this year. The index surged in the late 1980s during Japan’s bubble economy, when asset prices soared. But it collapsed when that financial bubble imploded in early 1990.
Elsewhere in Asia, Hong Kong's Hang Seng recovered from early losses, rising 0.3% to 18,028.28, and the Shanghai Composite index shed 0.8% to 2,957.57.
Taiwan's Taiex jumped 1.5% as chip maker and market heavyweight Taiwan Semiconductor Manufacturing Corp. gained 2.7%.
In Australia, the S&P/ASX 200 surged 1.2% to 7,831.80, while the Kospi in Seoul advanced 1.1% to 2,824.94.
Bangkok's SET picked up 0.5%.
On Wednesday, U.S. stocks kept rising in a holiday-shortened session after weak reports on the economy kept the door open for possible cuts to interest rates.
U.S. markets are closed Thursday for the Independence Day holiday.
On Wednesday, the S&P 500 rose 0.5% to set an all-time high for a second straight day and for the 33rd time this year. It closed at 5,537.02. The Dow dipped 0.1% to 39,308.00, and the Nasdaq composite gained 0.9% to 18,188.30.
The hope on Wall Street is that the economy will soften by just enough to keep a lid on upward pressure on inflation, but not so much that it throws workers out of their jobs and triggers a recession.
A much more anticipated report will arrive on Friday, when the U.S. government will give its comprehensive update about how many workers employers added to their payrolls during June.
The yield on the 10-year Treasury dropped to 4.35% from 4.44% late Tuesday, a notable move for the bond market, and much of the slide came after the report on U.S. services businesses. It’s been generally sinking since April on hopes that inflation is slowing enough to get the Federal Reserve to lower its main interest rate from the highest level in more than two decades.
In other dealings early Thursday, U.S. benchmark crude oil gave up 41 cents to $83.47 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, lost 35 cents to $86.99 per barrel.
The U.S. dollar fell to 161.23 Japanese yen from 161.67 yen, reflecting expectations that U.S. interest rate cuts might narrow the gap in rates with Japan, where the benchmark lending rate is near zero.
The euro rose to $1.0799 from $1.0787.