Japan stocks are roaring despite risk-off mood

2024-01-10
Summary:

Japan stocks soared, with Nikkei 225 hitting a 33-year high, outshining global peers impacted by diminishing rate-cut expectations.

Japan stocks kept going forward on Wednesday, with the Nikkei 225 hitting a 33-year high in the previous session. The market has overshadowed global peers which were dragged down by ebbing rate-cut expectations.

Chip-related shares such as Tokyo Electron were among the best formers, pushed higher by growing frenzy about AI which also helped Nvidia close at a record high overnight.


A correction may not come as soon as next week or this week but investors should get cautious over the near term, said Naka Matsuzawa, chief macro strategist at Nomura. The Nikkei clocked its best year in a decade in 2023.


Both consumption and trade are stuck in the mud. Japan's exports in November fell for the first time in three months a China’s demand sagged, underscoring worries that slowing overseas economies will complicate the prospect of growth.


Japanese household spending in Nov fell 2.9% from a year earlier, down for nine months in a row, government data showed on Tuesday. That was worse than the median market forecast for a 2.3% decline.


Market players trimmed bets of a January policy shift after a devastating earthquake that hit western Japan last week and Ueda's comments in a recent interview that the central bank was in no rush to unwind ultra-loose policy.

225JPY

Japan’s policy normalisation that has been priced in enabled the Nikkei 225 to break through the ceiling of a rectangle pattern. Nevertheless, a bearish MACD divergence could prompt profit-taking in the short term.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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