Japan’s Nikkei hits 34-year peak, nears all-time high level
Japan’s Nikkei hit a 34-year peak on Friday with the index charging toward its record high tracking overnight rally on Wall Street after the fall in US retail sales revived hopes of an interest rate cut as early as June, which in turn weighed on the dollar.
Nikkei surged 1.4% to 38,678 points, just within a whisker of the all-time high of 38,957 points hit in 1989. The index is up 4.8% for the week, the third straight week of gains. It has risen by a staggering 15.6% year-to-date (YTD).
Nomura on Thursday forecast the Nikkei would reach 40,000 points by the end of the year, citing reasons such as an end to deflation in Japan, global investment shifting away from dependence on Chinese equities and improvement in Japanese corporate governance, Reuters reported.
Meanwhile, other Asian markets were also trading higher. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% and was headed for a 1.4% weekly gain.
Data showed that Japan and Britain slipped into recession at the end of last year, and US retail sales last month fell by much higher than expected.
The US retail sales fell by 0.8% in January, the sharpest drop in 10 months, confounding expectations of a small dip of 0.1%. This renewed market expectations that the US Federal Reserve could begin rate cuts in June.
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That cheered Wall Street investors as the S&P 500 rose 0.6%, the Nasdaq Composite gained 0.30% and Dow Jones Industrial Average rallied 0.91% overnight.
The interest rate cut expectations weighed on the US dollar, which lost 0.4% against its peers overnight and was last at 104.36. The yen was last at 149.9 per dollar. It gained 0.4% overnight to move away from the critically watched 150 level that could invite possible Japanese intervention, Reuters reported.
The yield on benchmark US 10-year Treasury notes was little changed at 4.2496%, after slipping 3 basis points overnight. It was still up 6 basis points for the week.
Yield on two-year Treasury notes edged 2 basis points higher to 4.5930% and was up 10 basis points for the week.
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(With inputs from Reuters)
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Published: 16 Feb 2024, 08:42 AM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.