Japan's Nikkei index rose by 2% on Friday, driven by gains in chip-related stocks and easing expectations of a U.S. Federal Reserve rate hike.
The rally was supported by strong performances from companies like Advantest and Tokyo Electron, which saw increases of 5.3% and 3.4%, respectively. Meanwhile, Fujikura's shares surged 7% following an upward revision of its annual net profit forecast.
Ibiden, a supplier to AI leader Nvidia, climbed 6.28%, while Recruit Holdings was untraded due to a glut of buy orders after surpassing market expectations with its revised annual forecasts. The shares were bid at a daily limit high of 16,165, marking a 22.79% increase from the previous session's close.
“Gains of chip-related stocks supported the Nikkei. Easing bets for the U.S. Federal Reserve's rate hike were the driver.”
Daisuke Hashizume, Senior Strategist at Daiwa Securities
Despite these gains, investor activity remained subdued as Japan observed the 'obon' summer holidays, leading to a lack of market-moving cues, according to Daisuke Hashizume, a senior strategist at Daiwa Securities. Fast Retailing, the owner of the Uniqlo brand, saw a slight decline of 0.23%.
In contrast, Mitsui Kinzoku, a materials producer for lithium-ion batteries, experienced a significant drop of 17% after its revised annual net profit forecast fell short of market expectations. This decline highlighted the mixed reactions among investors amid ongoing global uncertainties.
In the Middle East, concerns persisted over the reopening of the Strait of Hormuz, as Iran and Oman neared a deal on new shipping lanes, though further conditions from the U.S. remain unmet. This geopolitical tension continues to weigh on market sentiment.
Background
The Nikkei's rise comes amid a backdrop of global economic uncertainties, including fluctuating U.S. employment data and geopolitical tensions in the Middle East, which have influenced investor sentiment and market dynamics.
Looking ahead, investors will closely monitor developments in the Middle East and the U.S. Federal Reserve's next moves regarding interest rates. These factors will likely influence global market trends in the coming weeks.
