TOKYO: Japan’s Nikkei rose on Friday, as a bigger-than-expected drop in US unemployment claims assuaged fears of a recession that had contributed to a massive sell-off at the start of the week.
The Nikkei closed 0.6% higher at 35,025.0, while the broader Topix finished up 0.9% at 2,483.3.
US stocks closed sharply higher overnight after the 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.
The Nikkei has managed to claw back most of its losses after shedding 12.4% in a brutal sell-off on Monday due to recession worries and the unwinding of investments funded by a soft yen, finishing the week with a comparatively tame 2.5% decline.
It was another choppy day of trading though, with the index briefly falling 1% before regaining its footing as turbulence persisted following the dizzying double-digit swings that rocked Japan’s stock market earlier this week. Investors also took positions carefully ahead of a long weekend. Japanese markets will be closed on Monday for a public holiday.
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.
“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.
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