TOKYO – Japan’s Nikkei share average rebounded on Thursday, finishing higher after two consecutive days of losses left stocks more attractive for bargain hunters. The Nikkei gained 0.56%, closing at 38,349.06, following a dip of 0.87% earlier in the session. The broader Topix index also saw a gain, climbing 0.82% to 2,687.28.
Investors were keen to step in, finding value in stocks after recent declines. According to Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory, “Despite a lack of major market-moving news, investors seized the opportunity to buy cheaper stocks, including shares in Toyota, which rose despite a stronger yen.”
Bargain Buying Boosts Market Sentiment
Japanese stocks are perceived as undervalued compared to their U.S. counterparts, creating buying opportunities. Toyota, which had seen a 2.2% drop earlier in the week, rose by 1.4%. Honda Motor also saw a 0.5% rise in its stock.
The largest contributor to the Nikkei’s performance was Tokyo Electron, a chip-making equipment manufacturer, which surged 6.74%.
Nikkei’s Positive Movement Amid Global Market Uncertainty
Global stock markets showed signs of weakness on Wednesday, with Wall Street indexes closing lower. The Nasdaq led the decline due to fears that the Federal Reserve might hesitate to cut rates amidst strong inflation data in the U.S. This uncertainty abroad, however, did not dampen investor confidence in Japan.
Stronger Yen’s Impact on Exports
The yen’s recovery has been a key topic this week. It advanced by 2.4% and recovered some of the losses from the U.S. presidential election period. The yen depreciated by 0.33% in Thursday’s trading, falling to 151.585 against the U.S. dollar.
A stronger yen can negatively affect exporters like Toyota, as it diminishes the value of their overseas profits when repatriated. However, the yen’s strength led to expectations that the Bank of Japan (BOJ) might delay any rate hikes during its upcoming December meeting, which was seen as positive for local equities.
Bank of Japan’s Possible Rate Decision Remains Uncertain
While many economists expect the BOJ to raise interest rates next month due to a strengthening economy, others remain cautious about the yen’s appreciation and the global economic environment. As the BOJ deliberates its December policy, investor sentiment is mixed.
Advantest Weighs on Nikkei’s Gains
Chip-testing equipment maker Advantest was one of the few stocks to pull back, falling 3.48% and contributing to the negative pressure on the Nikkei.
In Summary: Japan’s Nikkei ends higher today as investors rush to buy discounted stocks after two days of losses. The market was led by major players like Toyota and Tokyo Electron, though Advantest saw a decline. The yen’s recent strength and global market conditions continue to influence Japan’s equities outlook.
