Tokyo’s stock market saw a modest rise as Japan’s economy outperformed expectations, lifting investor sentiment. However, gains were tempered by a stronger yen and concerns over potential U.S. trade restrictions, keeping the market in check.
The Nikkei Stock Average finished 24.82 points higher at 39,174.25, while the Topix index gained 7.69 points to close at 2,766.90. Rubber product, oil and coal, and banking stocks led the advance. The upbeat market mood was driven by Japan’s robust GDP growth of 2.8% on an annualised basis for the October-December quarter, reinforcing optimism about the nation’s economic resilience.
Despite this, the yen’s appreciation weighed on exporters, particularly automakers, which struggled as their overseas earnings faced currency headwinds. Investors were also cautious about the impact of potential U.S. tariffs on imported vehicles. Meanwhile, expectations of further interest rate hikes by the Bank of Japan pushed up Japanese government bond yields, boosting bank stocks as rising long-term rates signalled stronger profitability prospects for financial institutions.
The U.S. dollar traded in the mid-151 yen range, slipping from Friday’s levels as traders adjusted to renewed speculation of further monetary tightening in Japan. Meanwhile, the benchmark 10-year Japanese government bond yield climbed to a 15-year high of 1.385%, reflecting shifting market expectations.
Although Tokyo stocks benefitted from a rally in U.S. tech shares, gains were ultimately capped by currency movements. The market remains poised for further developments as investors monitor policy signals from both Japan and the U.S.
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.
