The Nikkei 225 index average in Japan surged more than 2% on Monday to its highest level since July 1990, propelled by hopes that a debt-ceiling settlement with the United States has been reached, while a dropping yen helped export-related problems.
The Nikkei 225 rose as high as 31,560.43 in the first 10 minutes of trading, but gains were pared during the afternoon, with the index closing up 1.7% at 31,427.38.
Gainers on the top-tier Prime Market included marine transportation, wholesale trade, and bank issues. Shares of Japanese chip-related businesses; also continued to thrive as AI optimism bolstered Wall Street counterparts.
After soaring to a fresh six-month high of approximately 140.90 yen in Tokyo, the U.S. dollar returned to the lower 140-yen level, as the U.S. economic data indicating stubbornly high inflation in April reinforced expectations of future interest rate hikes by the Federal Reserve.
After U.S. President Joe Biden and House Speaker Kevin McCarthy struck an agreement on Sunday to raise the country’s debt ceiling, the Nikkei momentarily increased by more than 600 points, or more than 2 percent, in the morning on waning concerns of a technical default by the United States, according to experts.
But given U.S. markets are closed on Monday for Memorial Day, the benchmark index reduced its gains in the afternoon, according to Tomoichiro Kubota, senior market analyst at Matsui Securities Co.
Following the solid start for the week, Kubota predicted that “there is likely to be little movement in the Nikkei” until U.S. markets reopened on Tuesday.
Gains on Wall Street late last week bolstered the upward trend, with all three major indexes finishing up on optimism about a debt ceiling resolution and rallies in tech equities following optimistic earnings reports from semiconductor-related firms like Nvidia and Marvell Technology.
After affiliate SoftBank Corp. said on Monday that it is working with Nvidia to develop a next-generation platform for generative artificial intelligence and 5G communications, Nikkei index heavyweight SoftBank Group saw a 420-yen increase, or 8.2 percent, to 5,542 yen.
Since the yen’s devaluation increases the likelihood that firms’ foreign profits would grow when repatriated, equities tied to exports have also continued to support the market.
Nikkei 225 Long (Buy)
Enter At: 31770.78
T.P_1: 33180.24
T.P_2: 34596.89
T.P_3: 35847.59
T.P_4: 37223.37
T.P_5: 38889.16
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