Japan’s Nikkei gains on Wall Street’s lead

TOKYO: Japan’s Nikkei share average gained on Monday, buoyed by Wall Street’s Friday rally.

The Nikkei climbed 1.19% to finish the day at 39,161.34. The broader Topix rose 0.92%.

Big tech names supported the Nikkei’s rise, with chip-testing equipment maker Advantest soaring 4.54%. Chip-making machinery giant Tokyo Electron firmed 1.31% and startup investor SoftBank Group gained 2.01%.

Mitsubishi Motors was the Nikkei’s top-performing stock, surging 5.25% amid reports from Reuters and other media that alliance-partner Nissan is exploring a merger with Honda. The three companies were due to hold a news conference at 0800 GMT.

The auto sub-index climbed 2.11% to be one of the top performers among the Tokyo Stock Exchange’s 33 industry groups.

On Friday, Wall Street’s three main indexes advanced 1% or more each after a benign reading of US inflation saw traders raise bets for interest rate cuts by the Federal Reserve next year. The Philadelphia SE Semiconductor Index outperformed with a 1.5% jump, providing Japanese peers with an additional boost.

Equity sentiment was also supported by the passage of spending legislation in the US Congress on Saturday, averting a destabilizing government shutdown ahead of the busy holiday travel season.

US S&P 500 futures were up 0.46% as of 0652 GMT on Monday.

The Nikkei has climbed 2.5% so far in December, putting it on track for a 17% rally this year. The last trading day of the year in Japan will be Dec. 30.

Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management, said the environment is supportive for the Nikkei to rally to 40,500 by end-March, and finish 2025 at 45,400.

“We assume a relatively market-friendly Trump administration”, Kichikawa said.

“The Japanese economy is in a medium-term recovery phase,” he said. “The backdrop is relatively constructive for Japanese equities for next year.