Japan's Nikkei 225 index opened higher on Monday (September 15th) at 44,803.30 points before closing at 44,768.12 points. Although it briefly broke through its daily high of 44,888.02 points, the index was unable to maintain its full gains due to profit-taking near the close. Overall, the index recorded a daily gain of around +0.89% compared to the previous session.

Daily Movement

Throughout the session, the Nikkei moved within a range of 44,548.57 – 44,888.02 points. The strong opening sparked market optimism that the rally could continue, but selling pressure from investors seeking to lock in profits held back the advance.

Driving Factors

Fed Policy Expectations
Global markets are awaiting the Federal Reserve's interest rate decision this week. Expectations of a 25 basis point interest rate cut sparked positive sentiment in Asian markets, including Japan. The prospect of looser monetary policy in the US is believed to ease pressure on global borrowing costs.

Japanese Political Situation
The resignation of Prime Minister Shigeru Ishiba has sparked renewed political speculation. Sanae Takaichi's name has emerged as a strong candidate to replace him, with the possibility of bringing additional fiscal stimulus to maintain Japan's economic momentum. This prospect has increased investor optimism about the domestic stock market.

Yen Movement
The Japanese yen briefly strengthened against the US dollar, which typically puts pressure on stocks of major exporters like Toyota and Sony. However, the yen's temporary weakening has given export-oriented stocks room to support the index.

Profit Taking
After breaking through the psychological level of 44,000 points last week, investors tended to take profits. This is understandable after the Nikkei's long rally that took the index to a new all-time high.

Future Outlook

Looking ahead, market focus will be on:

This week's FOMC (Federal Open Market Committee) decision, which will significantly influence the direction of global markets.

Japan's domestic policy under the new PM candidate, who is expected to be more pro-stimulus.

The yen exchange rate against the US dollar, which will continue to be a key determinant of the performance of Japanese exporter stocks.

If the Fed does cut interest rates, investors expect the Nikkei index to retest the next psychological level above 45,000 points. However, high volatility is still anticipated due to global uncertainty and ongoing Japanese political dynamics.

Source: Newsmaker.id