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Nikkei Index drops sharply amid yen strength concerns

The yen’s strength intensified as the US Federal Reserve is anticipated to announce a 0.5% rate cut at the ongoing Federal Open Market Committee (FOMC) meeting. This expected reduction would narrow the interest rate differential between Japan and the US, pushing the yen to a high of 139 per dollar—its strongest level in over a year. Although the yen has recently settled in the high 140s per dollar, the threat of further appreciation remains, prompting heavy selling of export-driven stocks like Toyota. The impact of a stronger yen is feared to erode profitability for exporters, exacerbating market volatility.

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Yen hits 1-year high against dollar amid fed rate cut speculation

The yen’s appreciation reflects market expectations that the Fed will reduce rates, potentially narrowing the interest rate differential between Japan and the US. This sentiment is driven by speculation that the Fed might implement a larger-than-expected rate cut. Analysts anticipate that the Fed will ease rates for the first time in over four years, with the prevailing prediction being a standard 0.25% reduction. However, a recent report by the Wall Street Journal on September 12 heightened expectations for a more substantial 0.5% cut, double the usual amount.

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Yen strength stabilizes as markets anticipate policy decisions

During the second week, the yen appreciated amid expectations of a domestic interest rate hike, which led to a decline in Japanese stocks. The Tokyo Stock Price Index (TOPIX) fell by 1% over the week. Market participants are expected to remain cautious in the first half of the third week as they monitor currency fluctuations.

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Nikkei slides for seventh day amid yen strength and U.S. debate impact

The yen's temporary rise to the 140 yen range against the dollar exacerbated the sell-off, particularly impacting export stocks. The market was further pressured by perceptions from a U.S. presidential debate, where Democratic candidate Kamala Harris was viewed as having an edge over Republican incumbent Donald Trump. The speculation that Trump might lose, potentially affecting his promise of lower corporate tax rates, fueled concerns and led to increased selling by overseas speculators.

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Nikkei index slumps for fourth straight day as yen strengthens, export stocks hit hard

The Tokyo market was notably unsettled ahead of the August U.S. employment statistics, which are anticipated to be a key determinant for future U.S. interest rate adjustments. The ADP National Employment Report released on September 5 revealed job growth that fell short of market expectations, amplifying concerns about the upcoming data. Analysts predict that weak employment figures could prompt a stronger yen and weaken the dollar, potentially driving the Nikkei below the 36,000 yen mark early next week. Yamaguchi Masahiro, head of investment research at SMBC Trust Bank, warned of significant market reactions if the employment report disappoints.

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Nikkei dips, TOPIX gains for sixth day; semiconductor stocks decline

The Nikkei 225, a key benchmark of Japan’s stock market, closed marginally lower, reflecting investor caution amid ongoing concerns over global economic conditions and sector-specific challenges. Semiconductor stocks, which have been a major focus for investors due to their pivotal role in the global supply chain, were notably weaker. The sector's decline was attributed to a combination of factors, including persistent supply chain issues and reduced demand forecasts, which have led to a sell-off in related stocks.

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