Japan’s Nikkei Ends Flat as China Optimism Offsets Fed Jitters

Reuters

16:53 JST, October 18, 2023

TOKYO (Reuters) — Japan’s Nikkei share average ended flat on Wednesday as investors weighed better-than-forecast Chinese economic data against the possibility of a more hawkish Federal Reserve.

The Nikkei closed up just 0.01% at 32,042.25 in a volatile session where it fell as much as 0.54%, before rising 0.19% just before closing bell.

The broader TOPIX ended with a 0.14% gain.

Losers slightly outpaced winners on the Nikkei, with 115 components declining and 107 rising, and three flat.

Strong U.S. retail sales overnight raised the potential for a more protracted period of tight monetary policy, at a time when investors were already on edge due to the escalating conflict in Gaza.

“The markets are in a cautious mood,” amid the risks of a broadening Gaza conflict and the prospect the Fed could even raise rates again, said Kyle Rodda, senior financial markets analyst at Capital.com.

However, key Chinese indicators such as GDP, retail sales and industrial output beating forecasts “points to further green shoots in China’s economy,” he said.

A jump in crude oil prices – partly the result of simmering Middle East tensions – also weighed on overall sentiment.

At the same time, it made oil company Inpex one of the Nikkei’s top performers, with gains of 4.52%.

Banks also rose, tracking overnight gains in their U.S. peers following strong earnings. Corcordia Financial Group climbed 2.93% and Resona jumped 2.73%.

That helped a TOPIX index of value shares to end the day up 0.33%, whereas the growth index slid 0.08%.

The Nikkei’s top performer was Keisei Electric Railway , which surged 7.76% after shareholder Palliser Capital said the company is trading at a large discount and has room to release value.