Nikkei closes at two-month high

Japan’s Nikkei closed at a two-month high on Thursday, tracking Wall Street after U.S. inflation data supported expectations that the Federal Reserve will cut interest rates next week.

The Nikkei rose 1.21 percent to 39,849.14 points at the close, gaining for the fourth straight session and its highest closing level since Oct. 15. The index surpassed 40,000 points for the first time since that day, according to Sky News.

The broader Topix index rose 0.86 percent to 2,773.03 points.

“The Nikkei could not maintain the 40,000 level because investors sold stocks to take profits,” said John Morita, director of research at Shibajin Asset Management, according to Reuters.

“But the conditions are positive for local stocks because the yen appears weak against the dollar even with expectations that the Federal Reserve will cut interest rates and the Bank of Japan will raise interest rates,” Morita said.

The S&P 500 advanced on Wall Street on Wednesday after the inflation data.

The Bank of Japan is tipped to hold interest rates steady at its meeting next week, as policymakers prefer to spend more time examining external risks and indicators about wage expectations next year.

Japanese chip testing equipment maker Advantest jumped 5 percent, providing the biggest boost to the Nikkei, while Uniqlo owner Fast Retailing gained 0.87 percent.

Silicon chip maker Shin-Etsu Chemical fell 0.77 percent.

Of the 1,600 shares traded on the Tokyo main market, 64 percent advanced, 32 percent declined and the rest ended little changed.