Investing.com – Japan’s Nikkei 225 index rose to a record high in early trading on Thursday, tracking a one-day gain on Wall Street after Federal Reserve Chairman Jerome Powell gave a clear signal that interest rates would be raised in 2024 .
Speculation over a possible policy change by the Bank of Japan also benefited heavyweight bank stocks, while a rally in the technology sector appears to be slowing.
Immediately after the opening, the price increased by 0.6% to a record level of 40,499.0 points. The index has been stagnant for the past two sessions after breaking above the 40,000 level for the first time ever earlier this week.
While much of the Nikkei’s recent rally was driven by a rally in technology, Thursday’s gains were driven more by industrial and financial stocks.
Kawasaki Heavy Industries, Ltd. (TYO:) rose 8.3% to be the index’s top gainer, while megabank Sumitomo Mitsui (NYSE:) Financial (TYO:) rose nearly 4%.
Japanese stocks received a positive boost from Wall Street and U.S. stocks closed higher yesterday after Federal Reserve Chairman Jerome Powell said the bank would eventually cut interest rates in 2024.
Although Powell gave no clear guidance on the size or timing of the cuts, markets still rose on hopes of lower lending rates this year.
In Japan, shares of major banks received support from rising bets that the Bank of Japan is close to ending its ultra-low interest rate regime.
Shares of the country’s largest bank, Mitsubishi UFJ (NYSE:) Financial Group Inc (TYO:) rose 1.8%. Resona Holdings, Inc. (TYO:) added 3.4%.
Official data released Thursday showed the number of Japanese employees grew 2% more than expected in January. Other data also showed that real wages fell at their slowest pace in 13 months.
Rising wages are one of the main factors the Bank of Japan is considering when raising interest rates for the first time since 2007.
The central bank is expected to raise rates as early as March or April 2024.