Japan’s Nikkei average rises amid Wall Street gains

During morning trade on Tuesday, Japan’s Nikkei share average saw an increase as investors responded positively to record closing highs on Wall Street, leading to a surge in heavyweight domestic semiconductor stocks. By the midday break, the Nikkei had risen 0.3% to 39,155.16, having reached a three-week high of 39,336.66 earlier in the session. The broader Topix also experienced a rise, up 0.21% to 2,788.27.

This positive movement came despite a turbulent session on Wall Street overnight, where both the S&P 500 and Nasdaq logged record closing highs, boosting sentiment in Tokyo trading. Japan’s heavyweight technology shares performed particularly well, mirroring a 1.4% rise on the Philadelphia SE Semiconductor Index.

However, the domestic benchmark saw some gains diminish in the latter half of the session as investors became cautious ahead of the U.S. Consumer Price Index report for May, due on Wednesday, and the conclusion of the Federal Reserve’s two-day policy meeting. The Fed is widely expected to maintain current interest rates, with attention now on how soon policymakers might begin policy easing following a stronger-than-expected U.S. jobs report, which has reignited concerns.

Charu Chanana, global market strategist and head of FX strategy at Saxo, commented that markets are reassured by the expectation that the central bank’s next move will be a rate cut rather than another hike. This anticipation, along with sustained AI momentum, is supporting U.S. and Japanese stocks. Additionally, a weak yen continues to bolster Japanese equities, and political turmoil in Europe might attract more investments from long-term investors. The dollar last traded around 157.21 yen.

Meanwhile, the Bank of Japan is expected to maintain short-term interest rates in the 0-0.1% range at its upcoming meeting, although there are discussions among policymakers about ways to slow its bond-buying activities. Among individual stocks on Tuesday, chip-making equipment giant Tokyo Electron rose by 2.2%, and chip-testing equipment maker Advantest increased by 0.9%. Medical supplies manufacturer Terumo gained 1.1%, while Chugai Pharmaceutical saw a rise of 2.6%. Conversely, pharmaceutical firm Eisai experienced a decline of about 3%.

JPMorgan Japan Small Cap Growth & Income (LONJSGI), targets Japan income without compromising on Japanese growth opportunities. This Japan income investing opportunity gives investors access to a diverse and fast growing sector managed by local managers.

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