Japan's Nikkei share gauge rallies as bond market jitters subside

TOKYO: Japan’s Nikkei share average rallied on Thursday after US measures to steady its bond market helped restore investor sentiment and demand for riskier assets.

The benchmark Nikkei 225 advanced 1% to 65,982.49 as of the midday break.

The broader Topix rose 0.91% to 4,048.72.

Long-term borrowing costs from the US to Germany and Japan hit their highest in decades earlier this week, reflecting concerns about ballooning government debt and inflation.

The US Treasury announced overnight it will double buyback sizes for long-duration debt, prompting a sharp decline in US yields that also spread to Japan.

“The fall in interest rates is undoubtedly the key factor driving the market today,” said Wataru Akiyama, an equities strategist at Nomura Securities.

“It is notable that shares and sectors which had previously lagged behind the rise in AI and semiconductor-related stocks are now showing significant gains.”

Breadth was overwhelmingly positive, with 175 advancers on the Nikkei 225 against 48 decliners and 2 unchanged.

The largest percentage gainers in the index were Sumitomo Metal Mining, up 9.72%, followed by Sumitomo Pharma, 8.70% higher, and Kansai Electric Power, which gained 8.09%, set for its biggest one-day gain since August 2024.

The biggest losers were Rohm, down 3.88%, followed by Ibiden and Sumco, dropping 3.40% and 3.18%, respectively.