Following the moderation in the US July PPI, views spread that concerns about a Federal Reserve rate hike would ease, sending US stocks broadly higher. In Japan, the Nikkei Average ended about ¥405 higher, while TOPIX also advanced. Net buying by foreign investors and support from the weaker yen also helped the market.
Against the backdrop of the US Producer Price Index (PPI) for July indicating easing inflationary pressure, expectations spread that the Federal Reserve (Fed) was less likely to intensify monetary tightening in the near term, and major stock indexes moved broadly higher. The Dow, S&P 500 and Nasdaq all rose from the previous day, with technology stocks serving as a particular driver.
In Japan, following the rise in US equities, the Nikkei Average ended trading ¥405.22, or 0.59%, higher than the previous day at ¥68,713.81. The Tokyo Stock Price Index (TOPIX) also rose, with its gain settling in the 213? point range.
Market participants said the rise in US equities extended across a broad range of stocks, with export-related stocks, particularly semiconductor and electronic-components stocks, driving the indexes. Foreign investors had been net buyers from the Nikkei Average's opening, while the weaker yen also appeared to underpin earnings outlooks for exporters.
Looking ahead, if consumer-price indicators, including the CPI, confirm that inflation is moderating, this could provide a tailwind for risk assets globally. However, caution over profit-taking selling remains given the current elevated levels. In the short term, the area around ¥68,000 is seen as downside support, while ¥69,000 is viewed as upside resistance.