TOKYO: Japan’s Nikkei share average rebounded on Friday, as a surprise drop in US unemployment claims assuaged recession fears that had contributed to a massive sell-off at the start of the week, while a softer yen also provided some respite.
The Nikkei was up 1.6% at 35,380.23 by the midday break, after rising as much as 2% earlier in the session. The broader Topix climbed 1.5% to 2,498.35.
The rebound came after US stocks closed sharply higher overnight as the US unemployment report suggested that fears the economy could be heading for a hard landing may have been overblown and the gradual softening in the labour market remains intact.
Lending further support to the Japanese stock market, the yen was trading somewhat softer at 147.275 yen against the dollar, buoying export-related shares like Sony Group and Mazda Motor.
Trading volumes were subdued as investors took positions carefully ahead of a long weekend.
Japanese markets will be closed on Monday for a public holiday.
Trading has been choppy in recent days following a dizzying double-digit swings that rocked Japan’s stock markets earlier this week.
US recession worries and the unwinding of investments funded by a soft yen had fuelled the global sell-off.
While the market has calmed since then, analysts say volatility will likely continue into next week as market players look for data to support a soft landing scenario for the world’s largest economy.
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“The US economy is slowing down, but it’s difficult to judge at the moment whether it will cool rapidly or gradually,” making the market more reactive to economic indicators, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
The Bank of Japan’s decision last week to hike interest rates had also raised an alarm over how fast the central bank would tighten monetary policy, prompting its deputy governor to do some damage control on Wednesday.
The Nikkei has managed to claw back most of its losses after Monday’s brutal sell-off that saw the index shed 12.4%, putting it on track for a comparatively tame decline for the week.
Among individual stocks, Recruit Holdings and Itochu Corp gained nearly 7% each and were among the largest percentage gainers in the index.
Chip-making equipment giant Tokyo Electron jumped more than 10% before giving up most of its gains as investors digested its earnings results announced after market hours on Thursday.
The stock was last up 1.7%.
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