On Thursday, Japan’s Nikkei share average achieved a milestone by reaching its highest level since February 1990, driven by a weaker yen benefiting exporters and diminishing concerns over an imminent Bank of Japan (BOJ) rate hike. The Nikkei recorded a 1.77% increase, marking its third consecutive day of gains this week and closing at an impressive 35,049.86, a level not seen in almost 34 years. Additionally, the index was on track for its most substantial weekly gain since late March 2020.
The broader Topix also experienced a notable rise, closing 1.57% higher at 2482.87. Market participants are reevaluating their expectations for the BOJ’s monetary policy normalization in light of last week’s earthquake in western Japan and lackluster wage growth data.
According to Tony Sycamore, a market analyst at IG, the recent earthquake and the disappointing wage growth data are compelling investors to reassess when the BOJ might consider normalizing its monetary policy. November’s data revealed a 20th consecutive month of shrinking real wages, contrary to officials’ desires for wage gains before policy tightening.
The yen’s 0.9% decline against the U.S. dollar following the release of the data contributed to the market’s optimism. The weaker yen tends to support exporter shares by increasing the value of overseas profits when repatriated to Japan.
Japan’s stock market also received a boost from positive performances on Wall Street, with megacaps leading the rally. Notable gainers in Thursday’s session included SMC Corp, up 4.69%, Itochu Corp, gaining 4.5%, and KDDI Corp, closing higher at 4.21%. Sony Group Corp also recorded a 3.54% increase, while Suzuki Motor Corp gained 3.86%.
Conversely, the largest percentage losses in the index were incurred by Yamato Holdings Co Ltd, down 3.85%, followed by Rakuten Group Inc, losing 2.44%, and Tokyo Gas Co Ltd, down 1.43%. The market’s focus remains on the evolving economic landscape and the potential timing of the BOJ’s next policy move.