Japan's Nikkei closes at a 32-year high as US default fears ease

JAPANESE stocks rose on Friday (Jun 2), with the benchmark Nikkei index closing at a three-decade high, after US lawmakers voted to raise the debt limit and on signs central bankers are in no hurry to tighten the monetary policy.

SoftBank Group Corp rose 4.3 per cent amid speculation its chip unit will benefit from a boom in artificial intelligence investment. T&D Holdings leapt 4.28 per cent, leading insurers higher as risks of a financial catastrophe from a US default evaporated.

The Nikkei index advanced 1.21 per cent to 31,384.93, the highest close since July 1990. The broader Topix rose 1.55 per cent to 2,182.70.

Major US equity indexes closed at their highest levels since August 2022 after resilient labour market data added to optimism that the Federal Reserve can steer the economy to a soft landing.

The US Senate passed bipartisan legislation backed by President Joe Biden that lifts the government’s US$31.4 trillion debt ceiling, averting what would have been a first-ever default.

Back home, Bank of Japan Governor Kazuo Ueda told lawmakers the central bank did not have a time-frame for achieving its 2 per cent inflation target.

The Nikkei climbed 2 per cent over the past five sessions, clocking in an eighth straight weekly advance. Among its members, 202 stocks rose in value on Friday versus just 16 that fell.

“Despite the rise in the Nikkei, there’s been a trend where decliners on the Prime Market outnumbered gainers,” said Maki Sawada, a strategist at Nomura Securities.

“However, in the Nikkei’s climb over the past few days, the number of stocks gaining in price has been increasing, so that suggests the index is being bought more broadly,” she added.

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Among the Tokyo Stock Exchange’s 33 industry sectors, indexes tracking paper makers and transport equipment companies were the biggest gainers, rising more than 2.6 per cent. A basket of sea transport companies traded flat. REUTERS