US stocks set fresh record closing highs overnight after July producer prices came in flat, easing concerns about near-term Federal Reserve tightening and reinforcing expectations that the central bank will keep interest rates unchanged next month. The strength spilled over into Japanese equities on Friday. The Nikkei 225 rose 0.59% to close at 68,713.80, a record closing high, and ended the week 4.7% higher. The broader Topix advanced 0.51% to 4,197.20, also a record close. Nomura equity strategist Wataru Akiyama said rising US share prices are transmitting to Japan, with lower crude oil prices and cooling inflation also supportive of Japanese stocks. Among Nikkei 225 components, Nexon surged 19.85%, its biggest one-day gain since February 2024, while Shift added 7.57% and Nintendo rose 6.91%.
Tokyo stocks extended a weekly rally on Friday, with the Nikkei 225 closing at a record high as strength in US equities spilled into Japan.
The Nikkei 225 added 0.59% to end at 68,713.80, its highest close on record. The broader Topix rose 0.51% to 4,197.20, also a record close. For the week, the Nikkei was up 4.7%.
Soft PPI reinforces Fed rate-hold expectations
The move came after US producer prices were unchanged month on month in July, a reading that eased worries about near-term tightening by the Federal Reserve and boosted risk appetite. The data reinforced expectations that the Fed will hold its policy rate steady at next month's meeting. Overnight, both the S&P 500 and the Nasdaq Composite closed at record highs.
Nomura: US gains are feeding through to Japan
“Gains in US stocks are transmitting to the Japanese market,” said Wataru Akiyama, equity strategist at Nomura. “Falling crude oil prices and cooling inflation, which have weakened expectations for an early US rate increase, are also positive factors for Japanese equities.”
Nexon leads gains among Nikkei components
Among Nikkei 225 members, Nintendo-affiliated Nexon jumped 19.85%, its biggest one-day gain since February 2024. IT firm Shift rose 7.57%, and Nintendo added 6.91%.
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