Japan’s Nikkei Stock Tracks Wall Street Higher Ahead of Trump Inauguration (UPDATE 1)

Reuters

12:59 JST, January 20, 2025 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average advanced on Monday, buoyed by gains on Wall Street and a weaker yen, even as a potential source of market volatility loomed in the form of U.S. President-elect Donald Trump’s inauguration later in the day.

The Nikkei ended the day up 1.17% at 38,902.50, starting the week on firm footing after three straight weeks of declines.

The broader Topix rose 1.19%.

Whether the Nikkei can retain the momentum depends on the outcome of some key events this week – Trump’s inauguration speech, and any immediate executive orders that come in when Japan’s markets open on Tuesday morning.

U.S. earnings season is gathering pace and Japan’s corporate reporting season begins on Thursday, with chip-making equipment manufacturer Disco and motor maker Nidec.

Additionally, the Bank of Japan will end a two-day meeting on Friday, with strong hints towards a quarter-point interest rate hike. However, that outcome too may depend on how markets digest Trump’s first day in office.

Comments from Trump during Tokyo’s morning trading on Monday promised nearly 100 executive orders in the first few hours of his presidency.

“My impression is there’s going to be a huge flow of information right when Japanese markets open tomorrow,” said Kazuo Kamitani, an equities strategist at Nomura Securities.

“The environment for the market now hinges on whatever Trump has to say.”

Kamitani said that while 40,600 is unlikely to be breached solely on anything Trump does and 37,600 looks like a firm floor, “within that range there’s likely to be a high degree of volatility.”

Of the Nikkei’s 225 components, 186 climbed, 38 fell and one was flat.

Automakers were the top performers among the Tokyo Stock Exchange’s 33 industry groups, rising 2.19% after the yen dropped 0.8% against the U.S$. on Friday.

Toyota gained 2.94%. Subaru advanced 2.9%.

The Nikkei’s biggest percentage gainer was Daiichi Sankyo , which soared 8.23% after the U.S. Food and Drug Administration approved a breast cancer treatment it is developing with AstraZeneca.