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Nikkei Rallies on Wall St Tech Stocks Bump, Earnings Hopes

Tokyo’s benchmark index hit a one-month high with investors in positive mood ahead of a big earnings week in the US


Asian stock markets
A man wears a mask in the Shanghai Stock Exchange building in the Pudong financial district. Photo: Reuters

 

Japan’s Nikkei continued to ride the wave on Tuesday with its tech stocks leading the charge after an overnight rally on Wall Street. 

Tokyo’s benchmark share average closed at a more than one-month high, recovering all its losses since the Bank of Japan’s surprise policy tweak last month, with technology shares tracking New York’s surge.

The Nikkei share average gained 1.46%, or 393.15 points, to close at 27,299.19, its highest close since December 16, while the broader Topix was up 1.42%, or 27.54 points, to 1,972.92.

 

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The BOJ’s surprise policy tweak on December 20 to widen the trading band for the 10-year government bond yield had pushed the index lower.

But the Nikkei has been on an upward trend since the central bank stood firm and kept its ultra-loose policy unchanged at its policy meeting last week. 

It has gained 4.62% so far this month and is set to post its biggest monthly gain since October.

Wall Street closed sharply higher overnight, fuelled by surging technology stocks as investors began an earnings-heavy week with a renewed enthusiasm for market-leading momentum stocks that were battered last year.

In Japan, chip-making equipment maker Tokyo Electron rose 2.04% to lift the Nikkei the most. Its peer Advantest jumped 3.11%.

Meanwhile, GS Yuasa Corp jumped 3.77% after the battery maker said it will collaborate with Honda Motor in the high-capacity, high-output lithium-ion battery business, with plans to establish a joint venture by the end of this year. Honda gained 1.16%.

Markets in China, Hong Kong, Singapore, Malaysia, South Korea and Taiwan were all closed for the Lunar New Year holiday.

Indian stocks retreated with Mumbai’s signature Nifty 50 index down 0.08%, or 13.75 points, at 18,104.80.

 

Dollar Nears Nine-Month High

The dollar hovered near a nine-month low against the euro and surrendered recent gains against the yen, as traders weighed the risks of a US recession against the outlook for Federal Reserve monetary policy.

Overnight, Wall Street investors started an earnings-heavy week with a fresh excitement for market-leading momentum firms that were hammered last year.

The gains from Friday were maintained by all three major stock indices, with the tech-heavy Nasdaq leading the field thanks to semiconductor company prices.

Investors are almost convinced that the Federal Reserve will conduct a modest interest rate increase the next week despite the fact that it is still dedicated to containing the most intense inflationary cycle in decades.

According to CME’s FedWatch tool, financial markets have priced in a 99.9% chance of a 25 basis point increase to the Fed funds target rate at the conclusion of its two-day monetary policy meeting next Wednesday.

The Nasdaq Composite increased 223.98 points to 11,364.41, the S&P 500 increased 47.2 points to 4,019.81 and the Dow Jones Industrial Average up 254.07 points to 33,629.56. 

Microsoft and Tesla are anticipated to release their quarterly results this week along with a slew of industrials including Boeing and Union Pacific.

 

Key figures

Tokyo – Nikkei 225 > UP 1.46% at 27,299.19 (close)

Hong Kong – Hang Seng Index <> CLOSED

Shanghai – Composite <> CLOSED

London – FTSE 100 < DOWN 0.39% at 7,753.96 (0935 GMT)

New York – Dow > UP 0.76% at 33,629.56 (close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

Japan’s Factory Activity Declines for Third Month in a Row

India Planning Record Borrowing in New Financial Year

 

 

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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