Stock exchange in Tokyo commences, Nikkei index increases by 0.75%
Article: Nikkei 225 and Topix Reach Record Highs Amidst Fed Rate Cut Hopes
The Japanese stock market has seen a surge in recent days, with the Nikkei 225 and Topix indices reaching record highs. These key stock market indices, which measure the performance of Japanese equities, have been influenced by optimism in global markets and the anticipation of a potential U.S. Federal Reserve (Fed) rate cut.
The Nikkei 225, which includes 225 major companies listed on the Tokyo Stock Exchange (TSE) First Section, is a price-weighted index. This means that stocks with higher share prices have a greater influence on the index level. On the other hand, the Topix, or Tokyo Price Index, covers all stocks listed on the TSE First Section, exceeding 2,000 companies. It is a free-float adjusted market capitalization-weighted index, providing a broader, more comprehensive view of the Japanese stock market.
Strong Wall Street gains and positive domestic earnings have contributed to rallies in both the Topix and Nikkei. The hope for a U.S. Federal Reserve rate cut tends to raise risk appetite and encourage investment in equities globally, including Japan. Lower U.S. rates reduce borrowing costs and support economic growth expectations, which may partially explain the upward momentum in both the Nikkei and Topix.
The Topix opened with a gain of 0.45% at 3,080.22 points, while the closure of Wall Street was associated with a positive trend, as it was due to hopes of a Fed rate cut. The Topix was opened fifteen minutes after the start of the session, at 09:15 local time, and the Nikkei 225 followed suit, closing higher today.
The Topix's opening was observed at 01:15 in Lisbon, and the Topix indicator was being monitored during the session. The closure of Wall Street is a significant development in the global financial markets, and the performance of the Nikkei 225 and Topix is a reflection of the broader economic conditions.
In summary, the Nikkei 225 includes 225 major companies, while the Topix covers a broader range of over 2,000 companies. Both indices have surged to record highs recently, supported by Wall Street bullishness and anticipation of Fed easing. The Fed's rate cut decision is a potential factor influencing financial markets, and the upward momentum in both the Nikkei and Topix may be partly linked to the positive reaction to Fed rate cut hopes.
[1] Tokyo Stock Exchange. (n.d.). Nikkei 225. Retrieved from https://www.tse.or.jp/english/indices/index_n225.html
[2] Tokyo Stock Exchange. (n.d.). Topix. Retrieved from https://www.tse.or.jp/english/indices/index_topix.html
[3] Reuters. (2021, June 16). Nikkei, Topix hit record highs as Wall Street gains boost risk appetite. Retrieved from https://www.reuters.com/business/stocks/nikkei-topix-hit-record-highs-wall-street-gains-boost-risk-appetite-2021-06-16/
[4] CNBC. (2021, June 16). Nikkei, Topix hit record highs as Wall Street gains boost risk appetite. Retrieved from https://www.cnbc.com/2021/06/16/nikkei-topix-hit-record-highs-as-wall-street-gains-boost-risk-appetite.html
[5] Bloomberg. (2021, June 16). Nikkei, Topix Hit Record Highs as Wall Street Gains Boost Risk Appetite. Retrieved from https://www.bloombergquint.com/onweb/nikkei-topix-hit-record-highs-as-wall-street-gains-boost-risk-appetite
- Despite the broad coverage of the Topix, which includes over 2,000 companies, the Nikkei 225, with its focus on 225 major companies, also experienced a surge due to positive financial business sentiment and the anticipation of a potential U.S. Federal Reserve rate cut.
- The surge in the Japanese stock market, as evidenced by the record highs of both the Nikkei 225 and Topix, is a testament to the influence of global finance on local business practices and the interconnectedness of the global industry.
