Japan’s Nikkei Tracks Wall Street Lower Amid US Inflation Woes (UPDATE 1)

Reuters

12:26 JST, January 8, 2025 (updated at 16:20 JST)

TOKYO (Reuters) – Japan’s Nikkei share average fell on Wednesday, tracking overnight declines in Wall Street after a batch of upbeat U.S. economic data raised concerns that sticky inflation could slow the Federal Reserve’s pace of monetary easing.

The Nikkei index slipped 0.26% to close at 39,981.06. Of the index’s 225 components, 156 retreated, 67 rose and two finished flat.

The broader Topix slid 0.59%, with growth shares dropping 0.68% versus a 0.51% slide in value shares .

The U.S. S&P 500 sank 1.1% on Tuesday, after a report showed that services sector activity accelerated in December 2024, with a measure tracking input prices surging to nearly two-year high.

Rate-sensitive tech shares slid, with the tech-heavy Nasdaq index dropping 1.9%.

Chip shares initially fell in Tokyo, but rebounded over the course of the day, with Nomura strategist Kazuo Kamitani pointing to Nvidia’s presentation at CES overnight generating fresh buzz for the sector.

“In the end, expectations for AI, chips and everything of that sort continue to be high.”

He also flagged the psychological line at 39,500 as a support for the Nikkei.

Nvidia-supplier Advantest soared 3.43% and chip-making equipment major Tokyo Electron gained 1.62% after beginning the day lower.

Carmakers were overall supported by a weaker yen, which continued to hover near six-month lows against the U.S$.. A weak local currency boosts the value of overseas revenues.

Toyota gained 0.69%, while Subaru and Mazda, both highly dependent on U.S. sales, climbed about 0.8% each.

Uniqlo store operator Fast Retailing shed 0.48%, ahead of its earnings presentation on Thursday.