Global Market: Japan’s Nikkei rises as tech stocks gain, Fed signals cap rally

Japan’s Nikkei share average advanced on Friday, supported mainly by gains in technology and chip-related stocks, although concerns over inflation and uncertainty ahead of a speech by Federal Reserve Chair Kevin Warsh limited the broader market’s advance, Reuters reported.

The Nikkei rose 0.8% to 66,682.88 by the midday break, while the broader Topix gained 0.9% to 4,152.88. The Nikkei was on track for a weekly gain of about 1%, while the Topix was headed for a 2.1% advance.

Chip Stocks Lead Gains

Chip-related heavyweights provided the biggest boost to the Nikkei. Advantest gained 2.1%, while Tokyo Electron rose 1.5%, helped by strong performance among their US technology peers.


Security software company Trend Micro jumped 5.5%, making it the biggest percentage gainer on the Nikkei, while Fujitsu climbed 4.5%.

Overall, 139 of the Nikkei’s 225 components advanced, compared with 80 decliners, while six stocks were unchanged.

Japanese technology shares benefited from gains on Wall Street overnight. The Philadelphia Semiconductor Index rose 2.3% on Thursday, supporting investor appetite for Japanese chip and technology stocks.

Inflation Concerns Weigh on Sentiment

Despite the gains, investors remained cautious as rising bond yields and higher oil prices added to concerns over inflation. Continued uncertainty surrounding the Middle East also contributed to a more restrained trading environment.

Data released on Friday showed that underlying inflation in Tokyo accelerated for a third consecutive month in August. The figures, which are closely watched as an indicator of nationwide price trends, strengthened expectations that the Bank of Japan could consider raising interest rates.

Focus Turns to Warsh’s Jackson Hole Speech

Market participants were also awaiting comments from Fed Chair Kevin Warsh at the Federal Reserve’s annual symposium in Jackson Hole later on Friday.

According to Reuters, investors are looking for clues on the future direction of US interest rates after several Fed officials raised concerns about persistent inflation. Warsh has so far avoided offering clear forward guidance on the path for borrowing costs.

Nomura Securities strategist Maki Sawada said investors were adopting a cautious approach ahead of the speech, with market participants waiting for greater clarity before making investment decisions, Reuters reported.

The uncertainty surrounding US monetary policy, combined with renewed inflation concerns in Japan and higher oil prices, is likely to keep Japanese equities sensitive to developments in global bond and currency markets.