Nikkei share average up, trailing Wall Street

The Nikkei share average in Japan climbed on Tuesday, taking cues from a strong performance by Wall Street overnight. Investors were positioning themselves ahead of the release of crucial US inflation data, which could determine the direction of Federal Reserve policy. The Nikkei closed 0.64% higher at 27,602.77 after rallying to an early session high of 27,721.82, which put it within striking distance of last week’s two-month high at 27,821.22. Of the Nikkei’s 225 components, 166 rose, 54 fell, and five were flat.

Although the Japanese government had nominated academic Kazuo Ueda as the next Bank of Japan head, it had limited the impact on the markets as had been reported in the media. This news had minimal influence on market performance. The Nikkei’s top performer was Citizen Watch Co., which soared by 16.2% after announcing a stock buyback plan. Meanwhile, Kajima, an engineering company, rose by 5.4%, and Recruit Holdings, an online company, declined by 5%, becoming the Nikkei’s most significant drag.

Despite the mixed domestic earnings, the broader Topix rose by 0.78% to 1,993.09. It had previously climbed to 1,996.80, and came close to retaking the 2,000 level for the first time since Dec. 1. Daiwa Securities equity strategist Kenji Abe stated that “concerns over the global economy are receding now that the U.S. is likely to achieve a soft landing, Europe is likely to avoid stagflation, and China is likely to generate high growth after the end of the zero-COVID policy.” Abe expects the Nikkei to rise as high as 29,500 by the end of March and stated that investors are becoming more optimistic.

Kazuo Kamitani, a Nomura strategist, stated that the US CPI data that was awaited that evening would most likely be a significant driver of market direction, putting a limit on potential upside ahead of the result.