TOKYO: Japan’s Nikkei share average rose on Thursday, as investors snapped up undervalued stocks after data showed better-than-expected economic growth in the June quarter and Wall Street closed higher overnight on September rate cut prospects.
The Nikkei had risen 1% to 36,808.75 by the midday break after starting in negative territory on some profit-taking, while the broader Topix was up 1.2% at 2,612.48.
Stocks sensitive to the economy’s performance received some support from the data showing Japan’s economy expanded by a faster-than-expected annualised 3.1% in April-June.
Oil and coal producers rose 4.5% to lead sectoral gains, while banks and securities firms were not far behind, each gaining about 4%.
But the larger trend was investors kept buying shares that have underperformed since last month, particularly financials which have not recovered as much as expected until now, said Kenji Abe, chief strategist at Daiwa Securities.
“Japanese equity prices plunged from mid-July to early August and are now quite undervalued,” said the strategist.
The Nikkei tanked 12.4% on Aug. 5 in its biggest single-day fall since Black Monday amid US recession fears and a sharply stronger yen.
It has since clawed back all the losses from that fall but remains well off an all-time peak of 42,426.77 touched on July 11.
Wall Street also lent some support to the Nikkei on Thursday.
US stocks closed higher on Wednesday as fresh inflation data reassured investors that the Federal Reserve would start cutting rates next month.
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Investors are now awaiting US retail sales and weekly unemployment data due later in the day to gauge the health of the world’s largest economy.
Among individual stocks, Mizuho Financial Group climbed 5.6% and Sumitomo Mitsui Financial Group was up 5.3%.
Fast Retailing climbed 1.3% to give the Nikkei the biggest lift, while AI-focused startup investor SoftBank Group was up 2.6%.
The largest percentage gainer in the Nikkei was Dentsu Group with a rise of 8.7%. Kawasaki Heavy Industries and Socionext followed, both jumping 8.1%.
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