The Nikkei ended the midday session with a record high, up 1.49% at 41,386.8.
“The market expects Powell’s comments will indicate policy easing, which lifted U.S. chip stocks overnight and the Japanese chip makers tracked the trend,” said Takehiko Masuzawa, trading head of Phillip Securities Japan.
The S&P 500 and Nasdaq notched record-high closes on Monday, with Nvidia rising 2% and Intel rallying more than 6%, lifting the Philadelphia semiconductor index 1.9%.
Powell will speak to Congress on Tuesday and Wednesday. Traders now see a greater than 75% chance of a rate cut of at least 25 basis points by September, up from last week’s 60%, according to CME’s FedWatch. In Japan, chip-making equipment maker Tokyo Electron jumped 3.88%, giving the biggest support to the Nikkei. Chip-testing equipment maker Advantest climbed 3.17%. The U.S. rate cut expectations weighed on Japanese bank stocks, sending the banking index 0.59% lower. The index for value shares inched up 0.19%, while the growth stock index jumped 1.07%.
The broader Topix was up 0.62% to 2,885.37.
Investors were cautious about the possible impact of a sell-off in exchange-traded funds on Wednesday, a move to distribute payouts, which market players estimated to be worth about 750 billion yen ($4.66 billion), said Phillip Securities Japan’s Masuzawa.
($1 = 160.9800 yen)
