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Japan’s Nikkei 225 jumped 2.17% to hit a record high, crossing above 51,000 for the first time Wednesday, lifted by renewed optimism over U.S.-Japan trade ties and expectations of another Federal Reserve rate cut. The index closed at 51,307.65.The gains came after U.S. President Donald Trump and Japan’s Prime Minister Sanae Takaichi signed a new rare earths framework on Tuesday. Markets also grew more confident that the Fed would deliver a second straight 25 basis point cut to support slowing growth. Trump’s visit marked his first meeting with Takaichi, who assumed office earlier this month. He also met Emperor Naruhito at the Imperial Palace. Takaichi’s premiership will shift the long-ruling Liberal Democratic Party toward more economically liberal, socially conservative, and hawkish security policies, FitchSolutions company GeoQuant wrote in a note. Markets are pricing in nearly 100% odds that the Federal Open Market Committee will deliver another quarter-point reduction, on the heels of September’s cut, bringing the federal funds rate to a range between 3.75%-4.00%. “If [Fed chair Jerome Powell] comes off dovish, bets for future Fed cuts will increase and provide more fuel to market momentum,” veteran investor Louis Navellier wrote in a daily note. The federal funds rate, set by the Federal Open Market Committee, is the interest rate banks charge each other for overnight loans. While it doesn’t directly affect consumers, the Fed’s moves often influence borrowing costs for mortgages, credit cards and other loans.
