Japan’s Nikkei share average closes at 33-year high on technology boost
- 09 Jan 2024
Japan’s Nikkei share average closed at a 33-year high on Tuesday, as investors snapped up chip-related stocks tracking an overnight Wall Street rally in technology shares.
The Nikkei rose 1.16 per cent to finish at 33763.18, its highest since March 1990. Of the 225 stocks in the index, 156 shares advanced.
The broader Topix index rose 0.82 per cent to 2,413.09.
Chip-related stocks led gains in the Nikkei after tracking upbeat performances by US chipmakers Nvidia and Advanced Micro Devices on the Wall Street.
Shares of Tokyo Electron gained 3.28 per cent, while Advantest jumped 6.05 per cent, lifting the Nikkei by around 154 points.
DeNA, which mainly provides online services, topped the gainers with a 9 per cent jump following an after-market announcement on Friday that it would begin preparations to list shares for its taxi app partner company GO Inc.
Nintendo, which owns 12 per cent of DeNA shares, also came in as the top performer with a 4.4 per cent jump.
The Nikkei clocked its best year in a decade in 2023, underpinned by expectations of better governance.
After initially pulling back at the start of 2024, the benchmark index recovered to hit its highest since Japan’s “bubble economy” of the late 1980s and early 1990s.
“I think a correction may not come as soon as next week or this week but I’m a bit cautious, if not a little bit pessimistic, over the near term,” as markets assess the latest policy decisions by both the Fed and Bank of Japan over the next few months, said Naka Matsuzawa, chief macro strategist at Nomura.
Energy shares were among the worst performers, after oil prices fell about 4 per cent on Monday on sharp price cuts by top exporter Saudi Arabia.
The Tokyo Stock Exchange’s mining stock sub-index dropped 1.23 per cent, while marine shipping fell 2.26 per cent to lead losses among the 33 industry groups.
Japanese government bond (JGB) yields declined on Tuesday as a continued cooling of inflation in the capital Tokyo took pressure off the Bank of Japan (BOJ) to rush to raise interest rates. The 10-year JGB yield fell 2 basis points (bps) to 0.58 per cent as of 0535 GMT, the lowest level since Dec.21. Benchmark 10-year JGB futures rose 0.13 yen to 147.07.
The finance ministry is due to auction about 2.7 trillion yen ($18.77 billion) of 10-year notes on Wednesday.
Core inflation in Tokyo slowed for the second straight month in December as cost-push price pressures continued to ease, data showed on Tuesday.
Separate data showed household spending fell for the ninth straight month in November, underscoring the fragile nature of Japan’s economy.
“The BOJ cannot move this month,” said Shoki Omori, chief Japan desk strategist at Mizuho Securities. “The demand side of the Japanese economy isn’t looking that good.”
Expectations for a hawkish policy tweak at the BOJ’s next meeting on Jan. 22-23 had already been greatly reduced by the New Year’s Day earthquake in central Japan. At least 168 lives had been lost in the disaster, with more than 300 people still missing.
“We haven’t even seen the final death toll,” Omori added. “It wouldn’t be good for the BOJ to hike in this situation.”
The 20-year JGB yield fell 2 bps to 1.335 per cent, while the 30-year yield declined 1 bp to 1.6 per cent.
Japan plans to expand its budget reserves for fiscal 2024/25 to support recovery from the Noto peninsula earthquake, Minister of Finance Shunichi Suzuki said on Tuesday.
The cabinet earlier on Tuesday approved 4.74 billion yen in spending from fiscal 2023/24 reserves for such aid as water, food, diapers and heaters, Suzuki also said.
Using reserves allows for a faster and more “realistic” response than compiling an extra budget, Suzuki told a press conference, indicating the possibility of further expenditure from reserves as damage from the temblor becomes clearer.
The magnitude 7.6 earthquake that hit Noto in Ishikawa prefecture on Japan’s west coast on New Year’s Day killed at least 180 people, making it the deadliest since the 2016 quake in Kumamoto on the southern island of Kyushu.
Changes to the 2024/25 budget plan will be submitted to parliament’s regular session starting later this month. The government had approved a total budget of 112 trillion yen ($780 billion) just 10 days before the quake, including 500 billion yen for general reserves and another 1 trillion yen in reserves for inflation countermeasures.
