Nikkei In Tokyo Soared 2%Tracking Gains On Wall Street

Akira Ito
29 Jul, 2024
Tokyo

Benchmark indexes in Tokyo soared in a busy week of central bank decisions, and tech stocks led the gainers. 

The Nikkei and Topix indexes advanced more than 2% in tracking gains in Friday's trading on Wall Street after an alternative measure of inflation slowed in the U.S.

The decline in inflation strengthened the bets that the Federal Reserve is likely to initiate its rate-cutting program as early as September. 

The U.S. Federal Reserve Bank is expected to hold its key lending rates steady for the eighth time in a row at the end of the meeting on Wednesday. 

Investors were cautious ahead of the Bank of Japan's monetary policy decisions on Thursday, and traders are anticipating that the central bank will increase its short-term lending rate by 10 basis points to 0.1%. 

The Bank of Japan is expected to announce a tapering of its government bond purchase program from six trillion yen a month to as low as three trillion yen. 

The yen continued its rebound and traded at 153.69 against the U.S. dollar ahead of the Bank of Japan's decisions. 

Investors are worried that the yen could weaken to 165 against the yen if the central bank fails to lift rates and announce measures to support the yen, which could stoke retail inflation. 

 

Japan Stock Movers 

The Nikkei 225 stock average soared 2.1% to 38,468.63, and the Topix index advanced 2.2% to 2,759.67. 

Tech stocks surged sharply in Monday's trading, and Tokyo Electron, Advantest, Shin-Etsu Chemical, and Disco Corp. jumped between 8% and 2.5%. 

Furukawa Electric jumped 6.2% to ¥3,954.0, gained 6% to ¥2,977.0, and Resonac Holdings advanced 6.1% to ¥3,687.0. 

Hitachi Construction Machinery plunged 9.5% to ¥3,764.0 after the company reported weaker-than-expected earnings in the June quarter. 

Eisai Co. Ltd. dropped 12.2% to ¥5,768.0 after the European Union's drug regulator rejected the company's early Alzheimer treatment. 

The regulator said that the drug's positive impact on slowing cognitive decline was outweighed by swelling in the brain. 

The EU's rejection, a surprise to investors who had factored in the drug's approval, could also impact the drug's sales in the U.S. and in Japan.