Tokyo Indexes Recover 2%, Japan Business Sentiment Held Steady In Third Quarter

Akira Ito
01 Oct, 2024
Tokyo

Stock market indexes in Tokyo advanced, and the yen eased as investors reviewed the latest economic updates. 

The Nikkei 225 stock average jumped 1.9%, and the Topix index advanced 1.7% after market sentiment reversed from the previous sentiment. 

The yen weakened 0.5% to 144.36 against the U.S. dollar after calm returned to markets following the knee-jerk reaction in the previous session. 

Markets sold off after former defense minister Shigeru Ishiba won the race to lead the Liberal Democratic Party, following the abrupt resignation of Prime Minister Fumio Kishida. 

The hawkish monetary policy advocate Ishiba is expected to name former Chief Cabinet Secretary and health minister Katsunobu Kato as the next finance minister. 

Ishiba's selection of cabinet members suggested that the next prime minister is laying the groundwork for a stable administration that is likely to favor moderate policies and a gradual increase in interest rates. 

On the economic front, the au Jibun Bank Japan Manufacturing PMI was revised higher to 49.7 in September from the preliminary estimate of 49.6 and 49.8 in the previous month, S&P Global reported Tuesday. 

The manufacturing sector contracted for the third month in a row, and activities declined for the seventh consecutive month as new orders fell driven by weakness in export orders. 

In addition, the business sentiment weakened to the lowest level since December 2022. 

The Bank of Japan's sentiment index among large manufacturers was stable for the second quarter in a row, according to the survey released by the central bank on Tuesday. 

The sentiment index among the 1,730 large companies surveyed in the quarter was steady at 13, among 2,576 mid-sized companies was steady at 8, and among 4,732 small companies improved from -1 to zero. 

The overall index among all 9,038 participants improved to 14 from 12, according to the data available from the so-called Tankan survey. 

Meanwhile, large companies are looking to increase capital spending by 10.6% in the current fiscal year ending in March 2025. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average gained 1.9% to 38,643.77, and the Topix index advanced 1.7% to 2,690.32. 

Exporting companies and industrial heavyweights traded higher after U.S. Fed Chair Powell poured cold water over another 50 basis points rate hike during the next policy meeting. 

Mitsubishi Heavy Industries increased 7.5% to ¥2,278.0, Kawasaki Heavy Industries gained 8.2% to ¥6,286.0, and IHI Corp. jumped 7.9% to ¥7,966.0. 

Mitsubishi UFJ advanced 2% to ¥1,482.50, Sumitomo Mitsui Financial Group gained 2.1% to ¥3,110.0, and Mizuho Financial increased 2.1% to ¥2,998.0. 

Seven & I Holdings advanced 0.6% to ¥2,160.50, Isetan Mitsukoshi jumped 5% to ¥2,340.50, and Fast Retailing gained 2.4% to ¥48,570.0. 

Marubeni Corp. gained 1.9% to ¥2,385.50, Itochu Corp. added 3.7% to ¥7,960.0, Mitsui & Company jumped 3.7% to ¥3,293.0, and Mitsubishi Corp. added 2.5% to ¥3,027.0. 

Shipping companies were in focus amid elevated tensions in the Middle East, and shipping workers at 14 ports on the U.S. East Coast and along the Gulf of Mexico were demanding higher wages over the next five years. 

The container shipping companies have earned more than $400 billion over the four years since the onset of the pandemic in 2020, surpassing the combined profits in the previous four decades. 

Nippon Yusen KK increased 1.9% to ¥5,298.0, Mitsui O.S.K. Lines gained 1% to ¥4,976.0, and Kawasaki Kishen Kaisa added 0.5% to ¥2,224.50.