Japan’s Nikkei Share Average rose by 0.2%, closing at 39,533.55, driven largely by a surge in semiconductor stocks following positive performance in US markets. The growth was largely influenced by strong gains in key chip-related companies, such as Advantest, which saw a 1.9% increase, and Socionext, which jumped by 9.1%. The Philadelphia Semiconductor Index’s 3.4% rise was a notable contributor to these gains, offering a boost to Japanese equities.
However, market sentiment remained cautious, reflected in the slight dip of 0.04% in the Topix index. Investors appear hesitant as they await decisions from central banks. While the US Federal Reserve is expected to cut interest rates, which may boost economic activity, the Bank of Japan is likely to maintain its current rate, keeping pressure on the yen. As a result, exporters like Isuzu Motors benefitted from the yen’s weakening, while others, such as Toyota, saw only modest increases.
The outlook for the tech sector remains positive, with SoftBank Group gaining 0.5%. Despite caution ahead of central bank announcements, the strong performance in the semiconductor market points to growth potential in tech. This trend highlights the ongoing global impact of the semiconductor industry, with key players contributing significantly to Japan’s stock market performance.
In the broader context, central bank decisions are keeping markets steady. While the US Fed’s anticipated rate cut could boost market conditions, the Bank of Japan’s approach to maintain rates adds pressure on the yen, affecting exporters in varying degrees. Investors are closely monitoring these developments, as they will play a critical role in shaping market trends moving forward.
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.
