Nikkei hovers at 6-week highs after dovish Fed statement

  • Reuters
  • Stock Market News
Nikkei hovers at 6-week highs after dovish Fed statement
Credit: © Reuters.

* Domestic-oriented shares outperform

* Strong yen pressures auto sector

By Ayai Tomisawa

TOKYO, June 20 (Reuters) - Japan's Nikkei rose on Thursday and hovered at six-week highs

after the U.S. Federal Reserve signalled it was ready to cut interest rates to support the economy, but gains were gapped by a stronger yen.

The Nikkei share average .N225 rose 0.5% to 21,442.94 points by midmorning, after it climbed 1.7% on Wednesday.

The Fed said that it was ready to battle growing global and domestic economic risks, with rate cuts possibly as early as next month. dovish Fed message is supporting sentiment and the market is relieved for now," said Takashi Ito, an equity market strategist at Nomura Securities.

But Ito added that for Japan, a stronger yen would limit the upside. A stronger yen erodes Japanese manufacturers' profits made abroad when repatriated.

The dollar dropped more than 0.3% to brush 107.720 yen JPY= , its lowest since Jan. 4.

With the stronger yen hitting exporters, domestic-oriented sectors attracted buying. Real estate shares surged, with Mitsui Fudosan 8801.T surging 1.9% and Mitsubishi Estate 8802.T soaring 2.3%.

Shippers rallied, after the Baltic dry index .BADI , or freight charges, jumped 3.9%. Mitsui OSK Lines 9104.T surged 2%.

The auto sector underperformed, with Toyota Motor Corp 7203.T shedding 0.5%, Honda Motor Co 7267.T dropping 1.3% and Mazda Motor Corp 7261.T sliding 1.4%.

Elsewhere, pharmaceutical company Iwaki & Co 8095.T jumped 7.1% after it raised its net profit forecast to 870 million yen from 650 million yen for the six-month period ended May 2019.

The broader Topix .TOPX gained 0.3% to 1,560.

(Editing by Kim Coghill)

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