TOKYO: Japan’s Nikkei share average rose on Monday, buoyed by a stellar performance on Wall Street as investors held onto hopes for US interest rate cuts this year.
The Nikkei was up 0.9% at 38,849.65 by the midday break, hugging the psychologically significant 39,000-point mark. The broader Topix was up 0.83% at 2795.40.
Positive news on Wall Street helped shape sentiment during Tokyo trading, after the Dow and S&P 500 ended higher overnight on Friday as month-end repositioning drove a late sharp rally.
Meanwhile, the US personal consumption expenditures (PCE) price index increased 0.3% last month to match estimates, keeping alive expectations for the Federal Reserve to cut interest rates this year.
There was a sense of relief in the market after the PCE inflation data and a solid performance in US stocks, said Kenji Abe, an equities analyst at Daiwa Securities.
The market was also adjusting after Japanese government bond (JGB) yields hit their highest in over a decade last week, generating concerns about the negative impact on share prices, he added.
“Investors got shocked, but now they see the level of yields. …Real interest rates are still negative, so we have accommodating market conditions and are likely to see earnings growth going forward.”
Japan’s Nikkei sinks below 38,000 as Wall Street, higher yields weigh
The benchmark 10-year JGB yield last hovered at 1.065%.
The financial sector, which tends to benefit in a higher interest rate environment, rallied on Monday to help lift Japanese indexes, with insurance and securities topping the Tokyo Stock Exchange’s 33 industry sector sub-indexes.
Gains went well beyond financials, however, with 187 of the Nikkei’s 225 constituents advancing against 37 decliners. One share was untraded.
Among individual stocks, chip-making equipment giant Tokyo Electron climbed 1.6%, while fellow heavyweight Fast Retailing gained 1.5%.
Household electronics manufacturer Sharp surged to end the morning session up 4.2% after announcing with KDDI that they would collaborate on building an AI data centre powered by US firm Nvidia.
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