Nikkei Rises, Japanese Stocks Rebound

Japanese stock markets opened higher in Thursday's trading (Sept 17). The Nikkei 225 index rose approximately 0.63% to the 64,325 range, extending gains after closing 0.69% higher at 63,923 in the previous session.

The Nikkei's rise was supported by the yen's depreciation against the US dollar. The USD/JPY pair traded around the 156 level, boosting sentiment for export-oriented companies as it potentially increases the value of their overseas earnings.

Market sentiment also improved as oil prices continued to fall. Easing energy price pressures provided relief for import-dependent Japan and helped alleviate concerns regarding rising corporate operating costs.

However, investors remain focused on the impact of the Federal Reserve's decision to raise interest rates by 25 basis points to a range of 3.75%–4.00%. The Fed also signaled the possibility of further rate hikes before year-end to curb persistent inflation.

Market attention now turns to the Bank of Japan's decision on Friday. The BOJ is expected to raise interest rates to 1.25%—a 31-year high—in response to inflationary pressures driven by rising energy costs and the weak yen. Reuters

The Nikkei is expected to remain volatile throughout the session. While the weak yen and lower oil prices are providing market support, the prospect of tighter BOJ policy and rising global bond yields could limit gains for Japanese stocks.