Japan’s Nikkei stock average rose Monday, tracking Wall Street’s rise, as a U.S. inflation report supported expectations for interest rate cuts in the world’s largest economy this year.
The Nikkei closed 1.13% higher at 38,923.03 points, hitting the psychologically important 39,000 point mark earlier in the session.
The broader Topix ended up 0.92% at 2798.07.
The market reacted to the Personal Consumer Expenditures (PCE) price index released Friday, which rose 0.3% last month to match estimates, maintaining expectations of the Federal Reserve to cut interest rates. interest this year.
The Dow and S&P 500 finished higher overnight Friday into Saturday, reinforcing the sense of relief in Tokyo trading hours and supporting broad-based gains in Japanese stocks.
Of the 225 components of the Nikkei, 185 rose compared to 40 which fell.
The market also adjusted after Japanese government bond (JGB) yields rose to their highest level in more than a decade last week, sparking concerns about the negative impact on stock prices, a said Kenji Abe, an equity analyst at Daiwa Securities.
“Investors were shocked, but now they see the level of yields… Real interest rates are still negative, so market conditions are accommodative and earnings growth is likely to continue.
The benchmark 10-year JGB yield last hovered at 1.06%, after rising as high as 1.1% on Thursday, due to bets on further policy tightening from the Bank of Japan.
The financial sector, which tends to benefit from a higher interest rate environment, recovered on Monday, with insurance rising 3.1% and securities rising 3.8%, leading the 33 sectoral sub-indexes of the Tokyo Stock Exchange.
Among individual stocks, Daiwa Securities Group jumped 5.6% and Nomura Holdings rose about 4%.
Chipmaking equipment giant Tokyo Electron climbed 1.7%, while Fast Retailing, another heavyweight, gained 1.8%.
A handful of automaker stocks fell after Japan’s transport ministry said irregularities were found in model applications from five major auto companies. Mazda Motor and Toyota Motor led the declines, losing 3.3% and 1.8%, respectively.
