Japan’s Nikkei Jumps as Recession Fears Ease on US Retail Sales Data (Update 1)

Reuters

13:40 JST, August 16, 2024 (updated at 15:50 JST)

TOKYO, Aug 16 (Reuters) – Japan’s Nikkei share average climbed nearly 3% on Friday and notched its best week in more than four years, as strong U.S. retail sales data soothed fears of a recession in the world’s largest economy and Japan’s top trading partner.

The Nikkei closed 3.6% higher at 38,062.67, locking in its second-largest daily gain for the year, while the broader Topix finished up about 3% at 2,678.60.

The Nikkei logged its biggest weekly gain since April 2020, rising over 8%, buoyed by easing concerns about the state of the U.S. economy, a pause in the yen’s rapid appreciation and a pick-up in Japan’s economic growth.

Wall Street’s main indexes closed higher on Thursday after U.S. retail sales increased 1% in July following a downwardly revised 0.2% drop in June.

The rally was broad-based, with 219 of the Nikkei’s 225 constituents advancing against 5 decliners, while shares of many big names surged.

Nikkei heavyweight Fast Retailing jumped 6.2%, while chip-related share Tokyo Electron gained 4.8%, along with peer Advantest, adding 6.8%.

Meanwhile, the yen weakened against the dollar overnight in a boost to Japan’s export-related shares like automaker Toyota Motor, which rose about 2%.

The Nikkei fell more than 12% on Aug. 5 in its biggest single-day decline since Black Monday amid a storm of concerns, including U.S. recession fears sparked by a weak jobs report and a sharply stronger yen.

It has since clawed back those losses but remains well off an all-time peak of 42,426.77 touched in mid-July.

“The market is gradually recovering from last week’s shock but I don’t think we’ll see it completely shaken off until the August nonfarm payrolls data,” said Kyle Rodda, a senior financial market analyst at Capital.com.

“That will tell us whether the sell-off was a knee-jerk reaction or a rational response to a meaningful growth shock.”

Among individual shares on Friday, electrical component maker Fujikura rallied over 11% to become the biggest percentage gainer.