Japan's Nikkei Hits Record High, Surges Past 42,000 Amid Rate Cut Hopes


The Nikkei 225 in Japan surged past 42,000 points for the first time, driven by a strong performance in technology stocks, reflecting broader gains across Asia-Pacific markets. The index rose by 0.97%, while the Topix index, encompassing a wide range of stocks, also reached new heights with a 0.7% increase. Year-on-year, Japan's core machinery orders showed a significant rise of 10.8%, surpassing expectations for a 7.2% increase.

Despite an anticipated increase, core machinery orders unexpectedly declined for the second consecutive month on a month-on-month basis, dropping 3.2% against expectations of a 0.8% rise as projected by economists surveyed by Reuters. Machinery orders, which are volatile but serve as a leading indicator of capital expenditure in Japan, could suggest economic fragility. This development complicates the Bank of Japan’s efforts to normalize monetary policy.

Reports indicate that Toyota, the Japanese automaker, saw a rise in demand in India following Uttar Pradesh's decision to waive certain levies on hybrid cars, resulting in a 10% price reduction. Meanwhile, South Korea's Kospi index climbed 0.75% as the Bank of Korea maintained its interest rates at 3.5% for the 12th consecutive time, while the Kosdaq index also edged up by 0.11%.

The S&P/ASX 200 in Australia increased by 0.93%. Hong Kong's Hang Seng index surged by 1.41%, and mainland China's CSI 300 index rose by 0.35%. In the U.S. overnight, all three major indexes saw gains, with the S&P 500 and Nasdaq Composite rising by 1.02% and 1.18%, respectively.

The gains also meant that the S&P broke above the 5,600 mark for the first time, marking its 37th record close in 2024. The Nasdaq saw its 27th record close this year. The Dow Jones Industrial Average added 1.09%. Chip stocks were among the biggest winners of the U.S. trading session. U.S.-listed shares of Taiwan Semiconductor Manufacturing Company added 3.5% after revenue from April to June came in ahead of Wall Street estimates.

Qualcomm, a peer chip firm, saw a modest increase of 0.8%, while Broadcom rose approximately 0.7%. Nvidia, a prominent player in artificial intelligence, surged by 2.7%. These gains were bolstered by optimism surrounding potential rate cuts. Dow Jones forecasts indicate that the year-over-year inflation rate for June is expected to be 3.1%, down from 3.3% in May. Meanwhile, core inflation, which excludes volatile food and energy prices, is projected to rise by 3.4% compared to June of the previous year. In May, the Consumer Price Index (CPI) showed a 3.3% increase year-over-year.

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