Nikkei Rises as Investors Brace for Fed and BOJ Decisions

Tokyo stocks rose on September 16 as investors braced for key decisions from the Federal Reserve and Bank of Japan. The Nikkei 225 closed at 63,923, up 438.90 points, driven by futures-led buying.

The broader TOPIX rebounded, rising 0.6% to 4,061.72. Prime Market trading value remained thin, with investors avoiding large positions ahead of the Fed and BOJ decisions.

The market's ability to close above a key technical level was seen as important, with short-term players attempting to prevent a break below medium-term support. However, some market commentary warned that the rebound may have been more technical than fundamental, citing risks from higher interest rates, high crude oil prices, and uncertainty over AI development.

The BOJ is expected to raise interest rates to 1.25% on September 18 as inflation risks loom, according to Reuters' latest analyst poll. The key question is what Governor Kazuo Ueda says after the decision, with market reaction dependent on guidance for December and 2027 rather than the rate increase itself.

Rising rates are a concern for growth shares, while higher oil prices can weigh on corporate investment, household consumption, and business margins. Japan's trade deficit in August was a reminder of the energy shock's impact on the country's external balance.