Japanese stocks experienced their most significant weekly gain in over four years as the country’s benchmark indexes continued to recover from the recent market downturn, with strong performances from electronics manufacturers and banks.
The Nikkei 225 Stock Average rose by 3.6%, driven by an improved economic outlook in the US and a weaker yen, which approached 150 against the dollar, favouring exporters’ earnings. Meanwhile, the broader Topix index gained 3%. According to Hiroshi Namioka, chief strategist at T&D Asset Management in Tokyo, stocks that faced heavy selling pressure last month are being repurchased as the market recovers from the recent turbulence.
Notable contributors to the Topix’s rise included Hitachi Ltd. and Toyota Motor Corp., alongside semiconductor companies such as Tokyo Electron Ltd. and Advantest Corp., which also saw gains. Bruce Kirk, chief Japan equity strategist at Goldman Sachs, suggests that investors should capitalise on the recent market correction, considering the selloff more technical than based on fundamentals. Preliminary data from Japan’s finance ministry showed global investors were net buyers of Japanese stocks in the week ending 9 August, with record gross purchases.
The yen’s depreciation of approximately 1.5% this week supported the stock market amid indications of a resurgence in carry trades. Nomura Holdings Inc. noted that various investors are again borrowing yen to invest in higher-yielding assets elsewhere. As the equity market stabilises from last week’s sharp decline, all 33 of the Topix’s industry sub-indexes posted weekly gains. A rally on Wall Street further boosted the market, with strong US retail spending and labour market data highlighting the resilience of the world’s largest economy.
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