Japan's Nikkei retakes 39,000 level for first time since mid-April

JAPAN’S Nikkei share average rose on Monday (May 20), hitting 39,000 points for the first time in a month, as higher expectations for US interest rate cuts continue to keep market sentiment upbeat.

The Nikkei closed 0.73 per cent higher at 39,069.68, jumping over 1 per cent during trading before profit-taking set in. It was the first time the benchmark index reached the psychologically significant 39,000-point range since April 15.

The broader Topix was up 0.82 per cent at 2,768.04.

A milder inflation report last week has investors once again pricing in US rate cuts as early as September, buoying global market sentiment and in turn boosting Japanese equities.

Wall Street, which Japan’s stock market tends to track, saw stock indexes lock in weekly gains despite ending mixed on Friday. The Dow Jones Industrial Average closed at a record high.

Futures of US stock indexes were also up during Tokyo trading time, which may also have provided investors with a “sense of confidence,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

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The Nikkei hit an all-time high of 41,087.75 earlier this year before falling nearly 5 per cent last month in its largest monthly drop since December 2022. It is up about 16 per cent this year.

On Monday, buying was widespread, with 183 of the index’s 225 constituents advancing. Gains narrowed, however, as investors sought to lock in profits.

Among individual shares, Fast Retailing was up 0.9 per cent, and chip-making equipment giant Tokyo Electron gained 0.7 per cent.

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Shin-Etsu Chemical, which manufactures chip silicon products among other things, jumped 4.2 per cent.

AI-focused startup investor SoftBank Group fell 2.8 per cent.

Advantest, which counts US artificial intelligence firm Nvidia among its customers, edged down 0.4 per cent as investors awaited Nvidia’s revenue results due later this week.

“If the market perceives (Nvidia’s) outlook as better than expected, ...it will react with a rally in chip-related shares, not just in the U.S. but also in Japan,” said Ichikawa. REUTERS