Japanese Auto Stocks Gain on a Weaker Yen

By Megumi Fujikawa

TOKYO--Japanese auto stocks gained early Thursday as the yen weakened versus the dollar on market views that the Federal Reserve may opt for smaller rate cuts ahead.

The index for the Japanese auto shares was up 4.1% in morning trade with the yen trading around 143.60 to the dollar.

Toyota Motor shares rose 5.1% and Honda Motor was up 4.2%.

The Federal Reserve cut interest rates by a half-percentage but the dollar rose against the yen as Fed Chair Jerome Powell suggested that the central bank wouldn't keep cutting rates at the same pace.

"I do not think that anyone should look at this and say, oh, this is the new pace," Powell said at a news conference Wednesday.

A weaker yen is positive for Japanese exporters because it makes their products more price-competitive in the global markets and boosts their overseas earnings when repatriated to Japan.

"Japanese stocks are undervalued and will likely rise significantly in the long term," Rakuten Securities strategist Masayuki Kubota said and recommended investors to keep buying Japanese shares.

The Nikkei Stock Average was recently up 1.9% at 37084.48.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

September 18, 2024 21:51 ET (01:51 GMT)

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