Japan’s Nikkei Stock Average Edges up; Earnings, US House Election Results in Focus

Reuters

12:23 JST, November 8, 2024

TOKYO (Reuters) – Japan’s Nikkei share average rebounded on Friday, helped by a portion of big name stocks tracking Wall Street gains, although corporate earnings and uncertainty about whether Republicans would win both chambers of the U.S. Congress weighed.

The Nikkei .N225 rose 0.3% to 39,515.36 by the midday break after ending lower on profit-taking the previous day, while the broader Topix .TOPX was up 0.1% at 2,746.04.

U.S. stocks closed higher on Thursday after the Federal Reserve cut interest rates by 25 basis points, extending a sharp rally sparked by Donald Trump’s return as U.S. president..N

Japan’s AI-focused startup investor SoftBank Group 9984.T added 2.9% and other tech shares followed their U.S. peers higher to lift the benchmark Nikkei index.

Uniqlo parent firm Fast Retailing 9983.T and staffing agency Recruit Holdings 6098.T, up 0.8% and 4.4%, respectively, also lent support.

But investors were still waiting to see if Republicans manage to take the U.S. House of Representatives, after already winning control of the Senate, which could affect how easily Trump can enact his proposals.

“It’s unclear whether we’re going to see a ‘Red sweep’ or a divided government situation. So momentum for the Nikkei to aggressively rise is not particularly strong at the moment,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Domestic corporate earnings have also “not been particularly good,” with companies in economically-sensitive areas, like the automakers, posting more cautious earnings, limiting the upside for gains on the Nikkei, he added.

Corporate earnings drew out some of the biggest winners and losers on the Nikkei.

Electronics components maker Taiyo Yuden 6976.T tumbled 14.8%, cosmetic firm Shiseido 4911.T slipped 6.9%, while sauce maker Ajinomoto 2802.T added 8.6%.

Nissan Motor 7201.Tslumped as much as 10% after announcing on Thursday it will cut 9,000 jobs and 20% of its global manufacturing capacity.

It was last down 6.3%, along with Toyota 7203.T and Honda 7261.T, down 2.4% and 2.7%, respectively.

A relatively stronger yen versus the U.S. dollar JPY=EBS didn’t help sentiment for exporter shares.