Nikkei rises as Japanese yen stabilises, with tech shares leading gains

Key Points: 

• The Nikkei 225 index surged to 36,025.92, topping the 36,000 mark for the first time since August 2. 
• Technology stocks, led by Tokyo Electron and Advantest, spearheaded the rally. 
• The Japanese yen stabilised around 147 per dollar, providing a boost to market sentiment. 

The Nikkei 225 index (Symbol: Nikkei225) jumped as traders returned from the Obon holiday, driven by a more stable yen and strong gains in tech stocks.

The Nikkei index climbed to 36,025.92 during the morning session, breaking the 36,000 psychological level for the first time in nearly two weeks before entering the midday recess at 35,785.55. 

Picture: The Nikkei climbs over 1.5%, as observed on the VT Markets app. 

The broader Topix index also saw substantial gains, rising 1.8%, as the markets showed renewed optimism across the market. 

Tech stocks drive the rally 

The rally was led by technology stocks, with Tokyo Electron and Advantest taking the lead. Tokyo Electron, a major player in chip-making equipment, surged by 5.3%, while Advantest, a manufacturer of chip-testing machinery, climbed 5.5%. Other notable gainers included Sony Group, which advanced 5.5%, and Toyota Motor, which rose by 2.5%. 

These gains reflect a strong rebound in sentiment, particularly in the tech sector, as global demand for semiconductors and related technology remains robust. 

Yen stabilisation provides a boost 

The recent stabilisation of the Japanese yen around the 147 per dollar mark played a significant role in bolstering market confidence.

The yen had previously spiked to 141.675 per dollar earlier in August, raising concerns about its impact on Japan’s export-driven economy. However, the recent stability has alleviated some of these worries, allowing the Nikkei to recover from its earlier lows. 

Outlook of the Japanese stock market 

The current rally in the Nikkei presents potential opportunities, particularly in the tech sector. However, proper risk management should be exercised as the market digests key economic data from the U.S., which could influence global sentiment.

Monitoring movement of the Japanese yen and the ability of Nikkei to hold above the 36,000 level will be key to making informed trading decisions. 

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