Japan’s Nikkei share average ended a four-session decline on Friday, propelled by a 12% surge in the index heavyweight SoftBank Group and supported by a robust performance on Wall Street the previous nite. The Nikkei closed 1.26% higher at 65,020.94, yet it recorded a weekly loss of 2%. Technology investor SoftBank Group experienced a notable increase of 11.78%, emerging as the primary contributor to gains for the Nikkei, following a 3.29% rise in its chip unit Arm Holdings overnight. Memory chipmaker Kioxia experienced an increase of 5.4%.
The broader Topix recouped early losses to conclude 0.03% higher at 4,103.23. The index experienced a decline of 1.05% over the course of the week. “Given the overnight strength of Wall Street, the Nikkei’s gains seemed modest,” said Shuutarou Yasuda. “That is because U.S. stocks rose on curbed rate-hike bets, but the Bank of Japan is set to raise interest rates.” Markets have nearly completely accounted for a Bank of Japan interest rate hike to 1.25% scheduled for later this month. According to data from money market broker Tokyo Tanshi, market participants have fully incorporated the expectation of an additional rate hike by January.
U.S. Federal Reserve Governor Christopher Waller indicated on Thursday that he would endorse maintaining the current interest rates this month, contingent upon forthcoming data affirming a reduction in inflationary pressures. Japanese government bond yields experienced significant declines on Friday, with the 10-year JGB yield decreasing by 6.6 basis points to 2.9%. Yasuda noted that SoftBank’s significant gains were additionally bolstered by declining yields, as the group employs leveraged loans to invest in companies.
Japanese trading houses experienced a decline following the gains observed in the previous session, as Berkshire Hathaway’s CEO Greg Abel indicated that the company intends to maintain its investments in trading houses for “many decades”. Berkshire holds stakes exceeding 10% in several Japanese trading houses, including Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Mitsui experienced a decline of 4.45%, while Mitsubishi saw a decrease of 3.1%, contributing significantly to the downward pressure on the Topix index.
