Nikkei rebounds amid positive US inflation data and tech stock surge

Japan’s Nikkei share average rebounded by 1.99% to 38,415.75 by midday after hitting a three-month low in the previous session. The broader Topix also rose, climbing 1.88% to 2,750.28. Wall Street’s major indexes ended the week on a high note, buoyed by encouraging US inflation data and renewed investor interest in tech megacaps. This surge in optimism has raised hopes that the Federal Reserve might soon lower interest rates, thereby boosting market sentiment.

A strategist at Sumitomo Mitsui DS Asset Management noted the positive impact of the halt in the decline of US tech shares on Japanese equities, with nearly all of the Nikkei’s 225 constituents advancing. Key players like Tokyo Electron, Advantest, SoftBank Group, and Fast Retailing experienced significant gains, driving the index higher. Additionally, Shin-Etsu Chemical surged 6.8% after exceeding its April-June operating profit forecast, while Eisai saw a 12% drop following the EU’s rejection of its Alzheimer’s treatment.

Recovering US tech stocks and positive inflation data have revitalised the Nikkei, illustrating the interconnectedness of global markets. This highlights the significant impact of key sectors like technology on investor sentiment and market dynamics. Investors are now keenly anticipating the upcoming policy meetings of the Bank of Japan and the Federal Reserve. These decisions, along with expected earnings reports from major US tech firms, are expected to influence the future trajectory of global markets, reflecting the crucial role of policy and corporate performance in economic stability.

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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