Japan’s Nikkei Rebounds in Broad-Based Buying after Wall Street Comeback (UPDATE 1)

Reuters

12:27 JST, July 29, 2024 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average rebounded on Monday from a three-month low hit in the previous session, after Wall Street finished higher at the end of last week to boost investor sentiment.

The Nikkei closed 2.13% higher at 38,468.63 in a broad-based rally, while the broader Topix was up 2.23% at 2,759.67.

Monday marked the Nikkei’s first day of gains in nine sessions. The index hit its weakest level since late April last week amid a surge in the yen and declines in U.S. technology stocks.

Wall Street’s major indexes ended higher on Friday as investors flocked back to tech megacaps that had triggered broad sell-offs earlier in the week, and U.S. inflation data boosted optimism the Federal Reserve will soon commence cutting interest rates.

“The decline in U.S. technology shares has finally paused… so that seems to be working as a positive factor” for Japanese equities, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

All but 11 of the Nikkei’s 225 constituents advanced, and big name tech stocks surged to give the overall index a hefty lift.

Chip-related shares Tokyo Electron and Advantest were up 3.7% and 4.1%, respectively.

AI-focused startup investor SoftBank Group climbed 2.3%.

All 33 of the Tokyo Stock Exchange’s industry sectors gained.

The rally comes ahead of the Bank of Japan and the Fed’s policy meetings on July 30-31.

Sumitomo Mitsui DS AM’s Ichikawa expects it may be difficult for the Nikkei to move much higher or lower as markets await their decisions.

Earnings from more of the United States’ so-called Magnificent Seven firms this week will also be in focus.

Among individual stocks, Shin-Etsu Chemical surged 8.6% after the silicon wafer maker beat its operating profit forecast for the April-June period.

Eisai tumbled nearly 13% to sit at the bottom of the pack, after the European Union regulator rejected the drugmaker’s Leqembi treatment for early Alzheimer’s disease.