Japan’s Nikkei index experienced a significant surge on 15 October 2024, crossing the 40,000 mark for the first time in three months. This uptick was driven by gains in tech stocks and the weakening of the yen, which outweighed the negative impact from the declining energy sector.
The rise in the Nikkei can be attributed primarily to strong performances in tech companies, bolstered by Wall Street’s influence and a softer yen. Notably, Nvidia’s impressive results ignited excitement in the semiconductor sector, pushing Tokyo Electron and Advantest up by 4.5% and 3.4%, respectively. SoftBank saw a 5.8% rise, largely due to its association with Arm Holdings, and Lasertec Corp led growth with a 6.6% increase. For Japanese exporters, the weaker yen is a significant advantage, hinting at better corporate earnings in the coming quarter. This was already evident in Fast Retailing’s record-breaking results.
However, not all sectors benefited. Energy companies like ENEOS Holdings and Inpex faced setbacks as oil prices fell. Despite these challenges, the combination of strong tech sector performance and favourable currency conditions paints a generally positive outlook for Japan’s equity market.
The weaker yen enhances the competitiveness of Japanese exports, which could translate to higher future earnings and rising stock prices. Tech stocks, in particular, are leading the market in this trend, offering an optimistic view. Yet, energy stocks present a lingering concern due to the dip in oil prices.
Japan’s stock market movement reflects global economic trends, where technology and currency shifts play central roles. This highlights the complex relationship between domestic market dynamics and broader international influences, suggesting both growth potential and possible volatility as global conditions continue to evolve.
Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors.
