Japan’s Nikkei Tracks Wall Street Rebound; Banks Lead Gains

Reuters

13:19 JST, December 22, 2023

TOKYO, Dec 22 (Reuters) – Japan’s Nikkei share average rose on Friday, on course for a second weekly gain, tracking a rebound on Wall Street overnight after U.S. data offered more evidence of a soft landing for the world’s largest economy.

The Nikkei .N225 added 0.22% to 33,212.35 as of 0216 GMT, setting it up for a 0.74% weekly advance. Of the Nikkei’s 225 components, 162 rose, 57 declined and six were flat.

Bank stocks .IBNKS.T paced gains among the Tokyo Stock Exchange’s industry sectors, adding 1.88%, recovering from the aftermath of the Bank of Japan’s decision on Tuesday to keep yield-suppressing stimulus in place and offering no hints on the timing of an exit.

The broader financials-heavy Topix .TOPX gained 0.45%. The Topix value share subindex .TOPXV added 0.56%, outpacing the growth share subindex’s .TOPXG 0.33% rise.

“Rather than focusing on the current situation, the focus in the U.S. is on the outlook for a soft landing and a rate cut in the second half of next year, and that’s supporting equities,” said Kazuo Kamitani, a strategist at Nomura Securities.

“In Japan, hopes for spring wage negotations to bring salary increases that outpace inflation, and for a shift to – put simply – good inflation from bad inflation, is lifting the Nikkei.”

For the time being, the Nikkei is likely to range between the 25-day moving average at around 33,172 and the closing level of 25 days ago at 33,424, Kamitani said.

The index fell the most in two weeks on Thursday, snapping a two-day rally, following a sharp sell-off in U.S. equities.

Japan’s core consumer prices rose at their slowest pace in more than a year in a sign of easing cost-push pressures, data showed.

The Federal Reserve’s preferred measure of inflation, the PCE deflator, is due later in the day.

Unlike much of the world, Japanese markets will be open on Monday.