TOKYO: Japan’s Nikkei share average rebounded on Friday, helped by a portion of big name stocks tracking Wall Street gains, although corporate earnings and uncertainty about whether Republicans would win both chambers of the US Congress weighed.
The Nikkei rose 0.3% to 39,515.36 by the midday break after ending lower on profit-taking the previous day, while the broader Topix was up 0.1% at 2,746.04.
US stocks closed higher on Thursday after the Federal Reserve cut interest rates by 25 basis points, extending a sharp rally sparked by Donald Trump’s return as US president.
Japan’s AI-focused startup investor SoftBank Group added 2.9% and other tech shares followed their US peers higher to lift the benchmark Nikkei index.
Uniqlo parent firm Fast Retailing and staffing agency Recruit Holdings, up 0.8% and 4.4%, respectively, also lent support.
But investors were still waiting to see if Republicans manage to take the US House of Representatives, after already winning control of the Senate, which could affect how easily Trump can enact his proposals.
“It’s unclear whether we’re going to see a ‘Red sweep’ or a divided government situation. So momentum for the Nikkei to aggressively rise is not particularly strong at the moment,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
Domestic corporate earnings have also “not been particularly good”, with companies in economically-sensitive areas, like the automakers, posting more cautious earnings, limiting the upside for gains on the Nikkei, he added.
Corporate earnings drew out some of the biggest winners and losers on the Nikkei.
Electronics components maker Taiyo Yuden tumbled 14.8%, cosmetic firm Shiseido slipped 6.9%, while sauce maker Ajinomoto added 8.6%.
Japan’s Nikkei reverses course to trade lower on profit-booking
Nissan Motor slumped as much as 10% after announcing on Thursday it will cut 9,000 jobs and 20% of its global manufacturing capacity. It was last down 6.3%, along with Toyota and Honda , down 2.4% and 2.7%, respectively.
A relatively stronger yen versus the US dollar didn’t help sentiment for exporter shares.
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