Tech Rally Lifts Nikkei 225, Japan's Private Sector Activity Growth Accelerates In May

Akira Ito
23 May, 2024
Tokyo

Market indexes in Tokyo advanced and private sector activity expanded at the fastest pace in nine months. 

The Nikkei 225 and the Topix indexes gained after tech stocks rallied following a stronger-than-expected earnings report from the leading artificial chip maker, Nvidia. 

The AI chipmaker also estimated higher-than-expected revenue in the current quarter and announced a 10-to-1 stock split. 

The Japanese yen was under pressure and traded at 156.65 against the U.S. dollar at 3:00 p.m. Tokyo time, after the latest Fed's policy meeting minutes showed policymakers are worried about the slow pace of disinflation. 

The policymakers have been worried about stagnant inflation and suggested that the disinflation process is likely to take longer than previously anticipated. 

 

Private Sector Expansion Accelerates In May 

Japan's private-sector business activities accelerated for the third consecutive month in May. 

The au Jibun Bank Japan Composite PMI index increased to 52.4 from 52.3 in April, S&P Global reported Thursday. 

The index rose to its highest level since last August's 52.6 as private sector output accelerated for the third month in a row. 

The stabilization in manufacturing output also raised hopes that the economic recovery is likely to broaden in the second half of the year. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average rose 1.2% to 39,074.40, and the Topix index advanced 0.4% to 2,749.98. 

Tech stocks led the gainers in Tokyo trading after Nvidia reported sharply higher earnings and announced a 10-for-1 stock split. 

Disco Corp., Tokyo Electron, Advantest, and Screen Holdings gained between 1.5% and 2.7%. 

SoftBank Group advanced 4.4% to ¥8,738.0 after the credit rating agency S&P upgraded the company's debt rating by one notch to BB+. 

Teijin soared 10.2% to ¥1,550.0, and Renesas Electronics advanced 5.5% to ¥2,849.0. 

Last week, the composite and carbon fiber maker reported weaker-than-expected annual results. 

Revenue in the fiscal year 2023 ending in March increased 1.4% to 1.03 trillion yen from 1.01 trillion yen, net income swung to a profit of 10.6 billion yen from a loss of 17.7 billion yen, and basic earnings per share were 55.07 yen from a loss of 92.04 yen a year ago. 

The company lowered its total dividend in the fiscal year 2023 to 30 yen from 40 yen in the previous fiscal year and guided 30 yen in the current fiscal year. 

On the downside, Sumitomo Realty & Development, Sumitomo Metal Mining, and Dowa Holdings declined between 3% and 4%.