Image Credits: The Economic Times
Japan’s Nikkei share average surged nearly 3% on Friday, culminating in its most significant weekly gain in over four years. The rally was spurred by robust U.S. retail sales figures that alleviated concerns about a potential recession in the world’s largest economy and Japan’s primary trading partner.
The Nikkei closed the day at 38,062.67, marking a 3.6% increase and its second-largest daily gain of the year. The broader Topix index also saw a notable rise, finishing approximately 3% higher at 2,678.60. For the week, the Nikkei enjoyed a remarkable gain of over 8%, its strongest weekly performance since April 2020. This upturn was fueled by a combination of easing recession fears in the U.S., a halt in the yen’s rapid appreciation, and signs of improved economic growth in Japan.
The positive sentiment was largely influenced by Wall Street’s performance on Thursday, where major indexes closed higher following a 1% increase in U.S. retail sales for July. This followed a downwardly revised 0.2% decline in June, suggesting stronger consumer spending and easing recession worries.
The rally was widespread, with 219 of the Nikkei’s 225 components advancing, while only 5 declined. Notable performers included Fast Retailing, which saw its shares rise by 6.2%, and Tokyo Electron, which gained 4.8%. Advantest also saw a significant increase, with its shares climbing 6.8%.
The yen’s depreciation against the dollar further supported Japan’s export-driven stocks, with Toyota Motor, for instance, rising by about 2%.
This positive turn contrasts sharply with the Nikkei’s dramatic 12% drop on August 5, its largest single-day decline since Black Monday, driven by recession fears following a weak U.S. jobs report and a sharply stronger yen. Although the index has recovered some of those losses, it remains significantly below its all-time high of 42,426.77 set in mid-July.
Kyle Rodda, a senior financial market analyst at Capital.com, commented, “The market is gradually recovering from last week’s shock, but a full recovery may depend on the August nonfarm payrolls data. This will help determine if the recent sell-off was merely a reactionary blip or indicative of deeper economic concerns.”
Among individual stocks, electrical component maker Fujikura emerged as the biggest percentage gainer on Friday, with its shares surging over 11%.