Japan’s Nikkei 225 soars, amid gains in Asian stocks
What’s happening:-
Japanese shares rose sharply this morning, mirroring the rebound in the US stock market on Wednesday.
What happened:-
Japan’s Nikkei 225 recovered losses recorded earlier during the week, with the steepest declines in financial, technology and automobile stocks.
Investors also responded to the economic reports released by Japan this morning.
Why it matters:-
Wall Street stocks surged on Wednesday, driven by upbeat economic reports and rising speculations of the US Supreme Court rejecting President Donal Trump’s aggressive trade policy measures.
The developments in the US provided a boost to overall risk appetite, lending support to Japanes stocks this morning.
Data released this morning showed Japan’s real wages declined 1.4% year-over-year. This marked the ninth monthly decline in a row and raised speculations of further interest rate hikes by the Bank of Japan.
The S&P Global Japan services PMI was revised higher to 53.1 in October, from a flash reading of 52.4. Although the figure came in slightly below September’s reading of 53.3, it indicated continued growth in the services activity. New orders grew at the slowest pace in 16 months, while foreign demand fell further last month.
Japanese stocks rose significantly this morning
Japan’s composite PMI rose to 51.5 in October, from the preliminary estimate of 50.9. Then figure came in higher than September’s four-month low of 51.3, signalling an expansion in private sector activity for the second straight month.
Nintendo, Disco Corp, Lasertec and Hitachi were the top gainers in Japan’s equity market this morning. The Asian Dow and the major stock indices of China, Hong Kong and India recorded significant gains.
Japan’s Nikkei 225 jumped 1.31% to 50,870.10, after falling 2.50% in the previous session, while the TOPIX index rose 1.21% to 3,307.92.
What to watch:-
Data on household spending (0330 UAE Time), foreign bond investment (0350 UAE Time) and Reuters Tankan index (0400 UAE Time) will be released on Friday. Household spending in Japan rose by 2.3% year-over-year in August, accelerating from a 1.4% gain in the previous month. It is expected to surge by 2.5% in September.
Bond Investments by Japanese abroad fell by ¥351.40 billion during the week ending October 25. Analysts expect the Reuters Tankan index for Japanese manufacturers to rise to a reading of +10 in November from +8 in October.
Calm prevails on Wall Street as the fate of Trump's tariffs is awaited.
US markets were calm on Wednesday after an earlier decline in shares of major technology companies.Concerns mounted over the narrowing range of stocks leading market gains, while a shift in the FederalReserve's tone dampened optimism about interest rate cuts, and technical indicators reflected increasinglycautious signals, coinciding with warnings from Wall Street executives about a potential valuationbubble.During a hearing that lasted about three hours on Wednesday, the judges hinted that they were prepared to impose significant restrictions on Trump's economic agenda for the first time since he took office in January.
Commodity, currency, and Chinese market movements
In commodity markets, gold held onto its gains, while oil edged higher after three days of losses.US Treasury yields stabilized after gains in the previous session, following the US government's indication of its intention to increase the size of upcoming auctions. Signs of economic resilience have reduced the likelihood of an interest rate cut by the Federal Reserve in December. The Bloomberg Dollar Index also continued its decline.Meanwhile, the number of Chinese companies listed in MSCI's global indices rose for the first time in nearly two years, paving the way for an influx of additional investments from passive funds.Data compiled by Bloomberg showed that MSCI added 26 Chinese companies and removed 20 in its latest quarterly review, marking the first time since February 2024 that additions have outnumbered removals in its benchmark global index.