Image Credits: The Daily Beast
Japan’s Nikkei Stock Average saw a notable recovery on Tuesday, rising by 1.8% to close at 38,062.92, marking its highest finish since August 1. The rally was largely fueled by a weaker yen and gains in technology stocks, as global investor sentiment was bolstered by a more optimistic economic outlook for the U.S.
During the trading session, the Nikkei surged by over 2% before settling at its final figure. The broader Topix index also experienced gains, rising 1.1% to end the day at 2,670.54. The upward movement in the Nikkei was driven by domestic tech stocks tracking their U.S. counterparts higher, contributing to the overall positive performance of the benchmark index.
Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management, attributed the positive sentiment to diminishing recession fears in the U.S. He noted that solid performance in U.S. equities has had a favorable impact on Japanese stocks. This optimism was further supported by recent U.S. economic data that fueled hopes for a soft landing for the world’s largest economy.
Market participants are now looking ahead to comments from Federal Reserve Chair Jerome Powell, scheduled for Friday at the Jackson Hole Economic Symposium, which could provide further insights into the Fed’s interest rate strategy.
In the tech sector, AI-focused SoftBank Group saw a gain of 3.1%, while chip-related companies such as Tokyo Electron and Advantest rose 1.6% and 2.1%, respectively. TDK Corp also saw an increase of 1.3%. The yen’s pause in its upward trajectory provided a boost to export-oriented companies, with Toyota Motor rising by 1%.
The stock market saw broad-based gains with 204 out of the Nikkei’s 225 components advancing, while 20 declined. Fast Retailing, the parent company of Uniqlo and a significant index constituent, surged 3.6%, providing the largest boost to the index. Conversely, shares of Seven & I Holdings fell over 10%, reversing some of Monday’s gains driven by a takeover proposal from Canada’s Alimentation Couche-Tard.
Overall, the Nikkei’s performance underscores a positive shift in investor sentiment, driven by both domestic and international factors.