Japan’s Nikkei 225 index hits a three-month high. Driven by a tech stock rally and a weakening yen, the market mirrors US gains. As Tokyo’s bourse rides this wave of optimism, investors watch closely to see if the momentum will hold.
Japan’s Nikkei 225 index jumped 1.6% by midday, reaching 40,232.45, the highest level in three months.
This is the first time the index has crossed the 40,000 mark since 19 July, following a closure due to a public holiday on Monday. The broader TOPIX index also rose by 1.14%, ending at 2,737.
The gains in Japanese equities reflect a strong performance in the US market, where both the S&P 500 and Dow Jones achieved record highs.
A surge in semiconductor stocks, led by Nvidia, played a key role in driving up the tech sector overnight.
In Tokyo, technology stocks followed the US market’s lead, with notable performances from Tokyo Electron, which advanced 5.07%, and Advantest, which gained 3.53%.
SoftBank Group Corp also surged 6.85% after its US-listed subsidiary, Arm Holdings, delivered strong results.
These gains helped push the Nikkei beyond the 40,000 psychological barrier, with tech stocks leading the charge in today’s rally.
The yen’s depreciation, nearing 149.98 against the dollar, added to the positive momentum for Japan’s exporters.
A weaker yen generally benefits companies heavily reliant on overseas markets, as it makes their products more competitive and increases profit margins when foreign earnings are converted back to yen.
So far this year, the yen has weakened by around 9% against the euro, potentially boosting the earnings of Japanese companies with significant exposure to European markets.
Leading exporters such as Toyota Motor and Sony Group recorded gains of 0.39% and 0.64%, respectively, reflecting optimism surrounding currency movements.
Positive earnings reports have also boosted sentiment, with Fast Retailing announcing record profits, potentially spurring further gains during the earnings season.
Nonetheless, analysts remain cautious about external risks, particularly from the US, where elevated interest rates could weigh on corporate earnings.
Lasertec Corp was the top performer on the Nikkei today, soaring 7.38%, further highlighting the strong demand for tech stocks.
If the US stock market continues its upward trend, Japan’s market rally could persist. However, traders are keeping an eye on potential risks, such as yen volatility or shifts in US interest rate expectations.
The positive sentiment in Tokyo reflects growing optimism among investors, with a strong focus on the earnings season that could drive additional gains.
A continued weak yen is likely to sustain export momentum, while the performance of US tech companies, like Nvidia, may continue to influence Japanese tech stocks.
The interplay between yen fluctuations, US market trends, and corporate earnings will likely guide the Nikkei’s near-term movements.
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