Japan’s Nikkei Closes at Highest Since Mid-April as Value Shares Rally (Update 1)

Reuters

13:19 JST, June 25, 2024 (updated at 15:55 JST)

TOKYO (Reuters) – Japan’s Nikkei share average rose on Tuesday to its highest close in more than two months, as investors shifted focus to value stocks from semiconductor and other high-tech, while a weaker yen also lent support to export-related shares.

The Nikkei finished up 0.95% at 39,173.15, its highest closing level since April 15. The broader Topix climbed 1.72% to 2,787.37.

Investor sentiment remained subdued towards artificial intelligence- and chip-related shares during Asian trading hours, after U.S. semiconductor bellwether Nvidia slid for a third session on Monday and the Philadelphia SE Semiconductor index finished down 3.02%.

Disco Corp declined 5.5% to be the largest percentage loser on the Nikkei, while Tokyo Electron fell 1.7%.

Meanwhile, the weaker yen continued to support export-related shares, including auto maker Toyota Motor, which closed up 4.6%. A softer yen helps boost Japanese exporters’ overseas earnings when repatriated.

Investors also picked up value stocks over their growth peers, generating widespread gains in the financial sector.

Insurance firms rallied 4.3% to lead sectoral gains, followed by automakers and suppliers.

“Nikkei is a more value-oriented market, and investors may be rebalancing during the approaching quarter-end to gain exposure to the lagging part of the market,” said Charu Chanana, global market strategist and head of FX strategy at Saxo.

“A selective and bottoms-up approach for Japanese stocks could be attractive from here as yen appreciation risks escalate in H2.”

The Nikkei hit a record high of 41,087.75 on March 22 before retreating the following month. It has struggled to stay above the 39,000 level over the past two months as investors assess currency and bond market volatility, as well as the outlook of the Bank of Japan.

Among individual stocks, Uniqlo parent Fast Retailing rose 1.1% to give the biggest lift to the Nikkei.

Among the top percentage gainers was heavy machinery maker IHI, which rose 9.7% to hit a six-year peak.