Japan’s Nikkei climbs as tech stocks follow US growth shares

July 3, 2024

Key points

• Nikkei increased by 0.81% to 40,398.35 by 0142 GMT.
• Topix edged up 0.13% to 2,860.26, marking its fourth consecutive session of gains.

Japan’s Nikkei share average rose by 0.81% on Wednesday to reach 40,398.35 as of 0142 GMT, continuing the momentum from its 0.38% higher opening.

This upward movement was primarily fueled by gains in heavyweight technology stocks, which followed the performance of U.S. megacap growth shares overnight.

Picture: Nikkei on the rise, trading at 40419.15 on the VT Markets app.

On Wall Street, stock indexes closed higher on Tuesday, with contributions from Tesla and other megacap growth stocks. However, trading volumes were light ahead of the July 4 holiday and the anticipated release of June nonfarm payrolls on Friday.

Also read: Apple and Tesla boost stocks in pre-holiday trading

Topix sees gains as investors rotate into cheaper stocks

The broader Topix index saw a modest increase of 0.13%, rising to 2,860.26, and is poised to log its fourth straight session of gains. Investors showed a rotation in their targets, selling outperforming shares to take profits and buying cheaper stocks.

The Topix’s growth stock index rose by 0.46%, while the value share index slipped by 0.34%. Among the top performers, chip-making equipment maker Tokyo Electron surged by 2.48%, and chip-testing equipment maker Advantest gained 1.64%. Electronic components maker TDK jumped by 3.99%, and silicon wafer maker Shin-Etsu Chemical climbed by 2.4%.

Topix dragged down by Hitachi, Toyota, Tokio Marine, and Mitsubishi UFJ

Conversely, conglomerate Hitachi weighed down the Topix the most, slipping by 2.08%. Toyota Motor also saw a decline, falling by 0.9%. Insurer Tokio Marine Holdings dropped by 1.56%, and banking group Mitsubishi UFJ Financial Group slipped by 0.5%.

In the Tokyo Stock Exchange’s prime market, out of more than 1,600 stocks trading, 50% rose, 45% fell, and 3% remained unchanged.

The rise in Japan’s Nikkei, spurred by the performance of technology stocks, indicates a positive sentiment tracking the U.S. market. Investors are focusing on growth stocks, reflecting confidence in continued gains in this sector. 

However, the mixed performance of other sectors, such as conglomerates and automotive, suggests a cautious outlook. As the market anticipates key economic data, including the June nonfarm payrolls, traders remain vigilant.

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