Japan’s Nikkei share average experienced a notable rise on Tuesday, marking a three-week high as trading resumed following an extended holiday weekend. The gains seen on Wall Street overnight, combined with the Bank of Japan’s (BOJ) dovish stance from the previous week, contributed to improving investor sentiment.
By the close of the session, the Nikkei had climbed by 0.57%, reaching 37,940.59, the highest close since early September. At one point during the trading day, the index rose by as much as 1.9% to touch 38,427.15, surpassing the 38,000 mark for the first time since September 4. Japanese markets had been closed the day before in observance of a national holiday, further influencing the day’s activity.
In the United States, stock markets ended Monday on a modestly higher note. Investors were cautiously optimistic as they monitored whether the Federal Reserve’s recent rate cut would lead to a new trend in the coming days.
On Friday, the Bank of Japan had maintained steady interest rates. Governor Kazuo Ueda reassured markets by stating the central bank was in no rush to raise borrowing costs, highlighting the need to monitor global economic uncertainties before taking further action.
Shuutarou Yasuda, an analyst at Tokai Tokyo Research Institute, expressed that expectations for a soft landing in the U.S. economy had risen following the Federal Reserve’s 50 basis-point rate cut. Additionally, he noted that Governor Ueda’s comments last Friday were more dovish compared to his earlier remarks, which helped bolster the stock market.
Governor Ueda reiterated this view on Tuesday, emphasising the BOJ’s cautious approach regarding any future rate hikes.
On the corporate front, TDK, a leading manufacturer of electronic components, surged by 4.21%, becoming the top contributor to the Nikkei’s rise. On the other hand, Tokyo Electron, a chip-making equipment producer, initially showed gains but later reversed course, ending the day 0.93% lower and exerting downward pressure on the index.
The broader Topix index also rose, gaining 0.54% to settle at 2,656.73. Among the standout performers, Hitachi jumped 5%, delivering the biggest boost to the Topix.
Shingo Ide, chief equity strategist at NLI Research Institute, attributed the market’s strength to investors covering short positions made in anticipation of last week’s Fed rate-cut decision.
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