Japan’s Stocks Steady Near Highs Awaiting Yellen’s Speech

Japan’s Nikkei share average edged up on Tuesday but investors were cautious ahead of comments from U.S. Federal Reserve Chair Janet Yellen which could give clues on the likely lift-off date for policy tightening.  The Nikkei rose 0.1 percent to 18,482.55 points after dipping into negative territory briefly. If it ends higher, it will have posted five straight days of gains.

Expectations that the Fed will hike interest rates this year amid signals of a strengthening U.S. economy have kept the market sensitive to the prospects of capital outflows from Asia back to the United States.  “The consensus is that the Fed will raise rates some time between June and December, and people are speculating hard,” said Masaru Hamasaki, head of market and investment information department at Amundi Japan.

Yellen testifies before Congress later on Tuesday and there is much uncertainty over whether she will echo the dovish tone of the minutes from the Fed’s last meeting, or reaffirm June as a window for a first rate hike.  Analysts also said that since Japanese stocks have been trading at 15-year highs and there are signs that the market is overbought, Yellen’s speech could trigger profit-taking.


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