The Nikkei 225 of Japan surged over 1 percent to reach a historic peak of more than 51,000 on Wednesday, driven by renewed optimism about U.S.-Japan trade relations following another Federal Reserve rate cut.
The profits followed the signing of a new framework of rare earths between U.S. President Donald Trump and Japanese Prime Minister Sanae Takaichi on Tuesday.
Markets also became increasingly confident that the Fed would bring a second consecutive 25-basis-point reduction to help sluggish growth.
Trump’s visit marked his first meeting with Takaichi, who took office earlier this month. He also met with Emperor Naruhito at the Imperial Palace.
In a note, FitchSolutions company, GeoQuant, wrote that the premiership of Takaichi will change the ruling Liberal Democratic Party towards more economically liberal, socially conservative, and hawkish security policies.
The financial markets are putting close to a 100 percent likelihood that the Federal Open Market Committee will implement another quarter-point cut following the reduction of September, which will take the federal funds rate within a 3.75 percent to 4.00 percent range.
In a daily note, Veteran Investor, Louis Navellier, wrote, “If [Fed chair Jerome Powell] comes off dovish, bets for future Fed cuts will increase and provide more fuel to market momentum.”
The federal funds rate, set by the Federal Open Market Committee, determines the interest rates that banks charge each other for overnight loans.
Although it has no direct effect on the consumers, the actions of the Fed influence to affect the cost of borrowing mortgages, credit cards, and other loans.
However, the Topix was flat, the Kospi of South Korea increased 0.17 percent, and the small-cap Kosdaq decreased 0.25 percent.
Therefore, Australia’s S&P/ASX 200 declined by 0.16 percent. The Australian Bureau of Statistics reported Wednesday that consumer prices in Australia increased by 3.2 percent in the third quarter, the highest increase in more than a year.
This rise surpassed the 2.1 percent growth recorded in the second quarter and was higher than the 3 percent projection by the economists polled by Reuters.
Meanwhile, the Mainland CSI 300 increased by 0.37 percent. Hong Kong markets remain closed on holidays.
In the US, overnight, all three major averages ended higher. The S&P 500 was up 0.23 percent to close at 6,890.89. It had crossed the 6,900 mark, the first time on an intraday basis, earlier in the day.
The Nasdaq Composite rose by 0.80 percent to close at 23,827.49, and the Dow Jones Industrial Average rose by 161.78 points, or 0.34 percent, to close at 47,706.37.
Along with their closing peaks, the technology-driven Nasdaq and 30-composite Dow had new all-time intraday highs with the rest of the market S&P 500.
