Asia-Pacific markets mostly rose Wednesday, after Fed Chair Jerome Powell noted there was progress on reining in inflation. The Nikkei 225 rose after reclaiming 40,000 earlier for the first time since late March.

Japanese service activity contracted for the first time in nearly two years in June as domestic demand cooled, a private sector survey showed, while business confidence and hiring indicators remained upbeat.

The yen weakened to its lowest level in decades this week, but the slump no longer gave a boost to stocks. The correlation between the two has been mostly negative as that dents the appeal to foreign investors.

A weak currency was a boon to companies selling goods overseas and a driving force behind Japanese stocks hitting records earlier this year, but it hurts now by increasing import costs and stifling consumer spending.

Schroders was among those downgraded view on Japanese equities. The yen is translating to signs of deteriorating sentiment for consumers and smaller companies, its latest investment note said.

That being said, some remain bullish on the market endorsed by Warren Buffett. JPMorgan strategists expect the index to head toward 42,000 by year-end due in part to rising wages and corporate reforms.

The benchmark index cleared the key psychological level and revealed the all-time high. Technical indicators point to more gains ahead although 4,1000 may deter buyers.

EBC Financial Market Forecast Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Economic Research Findings or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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EBC Markets Briefing | Nikkei perches above 40,000 despite weaker yen