Nikkei 225 Hits Third Consecutive High, Core Machinery Orders Unexpectedly Declined in May

Akira Ito
11 Jul, 2024
Tokyo

The Nikkei 225 index closed at a new record high, and the Topix index inched higher to a new 34-year high as investors backed up tech stocks.

The enthusiasm surrounding artificial intelligence-linked chip and equipment stocks and expectations that the Federal Reserve is closer to cutting rates supported the market advance. 

Traders also bet that the Bank of Japan is more likely to taper its monthly Japanese government bond buying to 3 trillion yen from the current 6 trillion yen purchase amid pushbacks from large banks. 

The yen drifted lower to a new record three-decade low of 161.62 against the U.S. dollar on the worry that the Bank of Japan is still not ready to adjust rates higher and close the yield gap with U.S. bonds. 

The sharp decline in the yen has got small and medium-sized businesses worried because they can't pass on higher prices to consumers and have to import at a at a higher cost, denting their profit margins. 

On the economic front, Japan's core machinery orders, which exclude large-ticket orders like ships and power-generating equipment, rose 10.8% from a year ago in May, when orders rose paltry 0.7%. 

Orders declined 3.2% from the previous month and accelerated the fall from 2.9% in April to 857.8 billion yen, the Cabinet Office reported Thursday. 

For the second quarter ending in June, orders are likely to decline 1.6% from the previous quarter and fall 2.8% from a year ago to 2.58 trillion yen. 

 

Japan Stock Movers 

The Nikkei 225 closed at a record new high and crossed 42,000 for the first time, and the stock average and the Topix index advanced for the third consecutive day in a row this week. 

The Nikkei 225 stock average increased 0.9% to 42,224.02, and the Topix index rose 0.7% to 2,929.17. 

Tech stocks traded mixed, and Tokyo Electron gained 0.6%, but Advantest and Screen Holdings declined more than 1.5%. 

Softbank Group added 0.8% to ¥11,920.0 after artificial intelligence-linked stocks, including Broadcom, Nvidia, and Qualcomm, jumped as much as 2% in overnight trading in New York. 

NTN, Trend Micro, and Nitto Denko gained more than 3%. 

Mercari Inc. declined 3% to ¥2,324.0.