Tokyo’s Nikkei 225 rebounds after sharp plunge in previous session


Tokyo stocks bounced back on Friday local time after declining in the previous season due to the weakening yen.

The benchmark Nikkei 225 rebounded by 1.27 percent, or 389.91, reaching 30,991.69. Meanwhile, the broader Topix index showed a gain of 1.37 percent or 30.40 points, bringing it to 2,254.65.

In total, the Nikkei has fallen by 0.51 percent this week, while the Topix rose by 0.38 percent.

Chip-related stocks played a significant role in driving Nikkei's recovery. Advantest rose 0.93 percent after dropping by seven percent in the previous session. Tokyo Electron gained 1.40 percent, and Shin-Etsu Chemical jumped 2.06 percent.

Computer maker Fujitsu was the top performer on Nikkei, surging 11.99 percent despite cutting its full-year sales and operating profit forecasts.

Multibank
4.9/5
Multibank Review
Visit Site
eToro
4.9/5
eToro Review
Visit Site
Capital.com
4.8/5
Capital.com Review
Visit Site

In other sectors, shares of Takeda Pharmaceutical dropped 6.37 percent after slashing its full-year profit forecast by 36 percent, while Canon lost 4.70 percent after cutting its annual sales forecast.

Among Tokyo's prominent stocks, SoftBank Group saw a 1.59 percent increase, reaching 6,140 yen per share. Panasonic displayed a 0.31 percent gain, trading at 1,466 yen, while Toyota surged by 1.70 percent, hitting 2,638 yen.

Hitachi gained 2.06 percent at 8,884 yen, while shipping firm Nippon Yusen gained three percent to 3,876 yen.

In the Prime Market's top tier, notable gainers included companies in the marine transportation sector, nonferrous metals and metal product industries.

Japanese earnings season begins next week, with Toyota among the first companies to report. Traders expect strong earnings but are also closely watching the Bank of Japan's policy decision on Tuesday, according to Tokai Tokyo Research Institute market analyst Yuta Okamoto.

"Investors bought back stocks as the Nikkei approached its lowest level so far this month. The shares have fallen to a level which we consider cheap," said Ikuo Mitsui, fund manager at Aizawa Securities.

"But overall, Japanese companies are expected to boost their earnings, which has prompted investors to buy back shares. Towards the peak of the earnings season, investors will become more selective about which companies they want to buy."

Core inflation accelerates

In other news, Japan's core consumer inflation unexpectedly picked up in October, signaling broader price pressures. The inflation rate reached 3.3 percent, a notable acceleration from the 2.8 percent observed in September.

Government data revealed a 2.7 percent year-on-year increase in core consumer prices for October, surpassing economists' expectations of a 2.5 percent rise. Japan's core consumer price index factors in oil products while excluding fresh food prices.

The "core core" index, which excludes fresh food and fuel prices, is closely monitored by the Bank of Japan (BoJ) for broader price insights. It demonstrated a 3.8 percent year-on-year increase in October, following a 3.9 percent rise in September.

Meanwhile, services prices increased by 2.1 percent year-on-year in October, showing a faster growth rate than the 1.9 percent gain observed in September. This implies that the potential for increased wages could extend inflationary pressure beyond goods.

Despite inflation surpassing the two percent target for over a year, the BoJ maintains ultra-low rates. The central bank is waiting for price increases to shift to sustainable domestic demand-driven growth. It contrasts with peers, which are aggressively raising rates to combat inflation.

In addition to rising inflation, the BoJ is under pressure to adjust its yield curve control policy next week due to the recent global rise in interest rates. Sources told Reuters that the central bank is considering raising the yield cap set just three months ago.