Japan’s Nikkei climbs to mid-April high on value stock surge and weaker yen

June 25, 2024

Key points:

Nikkei finished up 0.95% at 39,173.15, highest since April 15
Weaker yen boosts export-related shares, with Toyota Motor closing up 4.6%

Japan’s Nikkei share average closed on Tuesday at its highest level in more than two months, marking a significant rally to 39,173.15, a 0.95% increase. The broader Topix climbed 1.72% to 2,787.37.

This upswing reflects a shift in investor focus towards value stocks, moving away from semiconductor and other high-tech shares. The rally was further supported by a weaker yen, which bolstered export-related shares.

Chart displaying the Nikkei 225 index with a trend of 1.02%, opening at 38,742.50 and closing at 39,136.15. The chart highlights a 1-hour interval, showing recent price movements with a high of 39,241.15 and a low of 38,735.0. This image is hosted at VT Markets, a forex CFDs brokerage, for the article titled 'Japan's Nikkei climbs to mid-April high on value stock surge and weaker yen.' This upswing reflects a shift in investor focus towards value stocks, moving away from semiconductor and other high-tech shares. The rally was further supported by a weaker yen, which bolstered export-related shares.

Picture: The upside prevails for Nikkei 225. Download the VT Markets app now.

Subdued investor sentiment in AI and chip-related shares

Investor sentiment towards artificial intelligence and chip-related shares remained subdued during Asian trading hours.

U.S. semiconductor giant Nvidia experienced a third consecutive session decline, with the Philadelphia SE Semiconductor index dropping 3.02%. Consequently, Japan’s Disco Corp saw a 5.5% decline, making it the largest percentage loser on the Nikkei, while Tokyo Electron fell by 1.7%.

Conversely, the softer yen provided a tailwind for export-driven companies. Toyota Motor closed up by 4.6%, benefiting from the weaker yen which enhances overseas earnings when repatriated.

Japan's Toyota Motor raised its full-year operating profit forecast by nearly 9%, after its third-quarter earnings raced past analysts' estimates thanks to a weaker yen and strong sales of high-margin cars and hybrid vehicles https://t.co/N4v6PCy29T pic.twitter.com/L9RWJmUSaZ
— Reuters (@Reuters) February 6, 2024

The financial sector also experienced gains as investors picked up value stocks over their growth counterparts, with insurance firms rallying 4.3%, leading sectoral gains.

Nikkei faces challenges despite previous high

The Nikkei previously hit a record high of 41,087.75 on March 22 but faced difficulties maintaining levels above 39,000 due to ongoing assessments of currency and bond market volatility, as well as the outlook of the Bank of Japan.

Read: Japanese yen plummets as silence on rate hike timeline from the Bank of Japan disappoints

Among individual stocks, Fast Retailing, the parent company of Uniqlo, rose 1.1%, providing the largest lift to the Nikkei. Heavy machinery maker IHI was among the top percentage gainers, climbing 9.7% to reach a six-year peak.

Moving forward, the cautious forecast suggests keeping an eye on the yen’s trajectory and the Bank of Japan’s policies, which will play crucial roles in shaping market trends.

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