23 Jun 2022, 11:59

Tokyo shares open higher as investors gauge Powell remarks

TOKYO, June 23, 2022 (BSS/AFP) - Tokyo shares opened higher on Thursday as
investors gauged inflation and recession risks after US Fed chair Jerome
Powell pointed to the need for further rate hikes.

The benchmark Nikkei 225 index rose 0.22 percent or 58.77 points to 26,208.32
in early trade, while the broader Topix index added 0.41 percent or 7.62
points to 1,860.27.

It came despite overnight falls on Wall Street after Powell warned that a
recession was "certainly a possibility" as the Federal Reserve pushes on with
hikes to tame inflation.

A soft-landing scenario has become "more difficult", Powell said, given risks
linked to the Ukraine war, China's strict Covid-19 measures and soaring food
and oil prices.

Still, his testimony "brought a certain reassurance" to markets because it
confirmed the Fed is not too optimistic about the economy, SMBC Nikko
Securities said, and US shares ended only slightly down -- viewed by analysts
as a sign of the market's resilience.

"US stocks scrounged out gains on the back of lower yields as investors
continued to flip-flop between recession and inflation fears," said Stephen
Innes of SPI Asset Management.

Tokyo shares were expected to rebound on Thursday from earlier losses, Okasan
Online Securities predicted.

With crude oil futures falling, "worries should weaken about rising costs for
businesses and consumers," Okasan said.

Innes, however, pointed to possible risks ahead.

"Our view is the bear market rally in stocks will be short-lived as sentiment
will turn sour on survey data starting with Friday's closely watched
University of Michigan sentiment index," he wrote.

"At the same time, increasing debates on a potential US hard landing could
spook US rates and FX investors."

The dollar stood at 136.08 yen, softening slightly from 136.22 yen on
Wednesday in New York.

Sony Group lost 0.18 percent to 11,350 yen in early trade, while SoftBank
Group jumped 1.55 percent to 5,103 yen.

Uniqlo operator Fast Retailing rose 1.91 percent to 70,830 yen. Nintendo rose
0.40 percent to 57,910 yen.

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