Reuters

Japan’s Nikkei Stock Average Gains on Softer Yen; Investors Snap up Banks and Defense Stocks (UPDATE 1)

Yomiuri Shimbun file photo
The Tokyo Stock Exchange

Reuters

12:30 JST, February 18, 2025 (updated at 17:00 JST)

TOKYO, Feb 18 (Reuters) – Japan’s Nikkei share average finished higher on Tuesday, as investors cherry-picked banks on rate-hike bets and defense stocks after their European peers closed higher overnight, while a softer yen boosted exporters.

The Nikkei rose 0.3% to 39,270.40 in its second consecutive session of gains. The broader Topix also finished 0.3% higher, at 2,775.51.

Japanese stocks traded in recent ranges with U.S. markets closed on Monday for a holiday, although a weaker yen supported buying of automakers and other exporter shares.

Toyota Motor ticked up 1.1%, while Mitsubishi Motors surged 6.9%.

Defense-related shares rallied, after their European peers gained on Monday as investors priced in the likelihood of increased military spending in the region.

Mitsubishi Heavy Industries added 2.7%, Kawasaki Heavy Industries climbed 4.7% and IHI Corp jumped 6.3%.

Rate-sensitive banks gained 1.6% as Japanese government bond yields hit fresh highs. Data on Monday showed the economy expanded more than expected in the fourth quarter, supporting the Bank of Japan’s plans to continue hiking rates.

Market participants now await remarks from BOJ board member Hajime Takata on Wednesday and the CPI report on Friday.

A hot inflation figure may prompt markets to bring forward their rate-hike expectations, strengthening the yen, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

“If the yen appreciates significantly, that could put pressure on Japanese stocks and potentially trigger selling,” he said.

Mizuho Financial Group gained 1.6%, Sumitomo Mitsui Financial Group was up 0.8%, and Mitsubishi UFJ Financial Group rose 2%.

Elsewhere, chip-related shares Advantest and Tokyo Electron added 3.2% and 1.4%, respectively, to give the Nikkei the biggest lift.

Nissan Motor climbed 3.7% after the Financial Times reported rival Honda Motor is ready to revive merger talks if Nissan CEO Makoto Uchida steps down. Honda edged down 0.5%.