Japan’s Nikkei share average crossed the key psychological 32,000 mark on Thursday for the first time in two weeks amid bets for an end to the Federal Reserve’s monetary tightening cycle and a peak in U.S. yields.
Chip-related shares were among the top gainers on the benchmark index, as growth stocks benefited from anticipation of lower borrowing costs.
The Fed left rates unchanged in a policy decision on Wednesday, with Chair Jerome Powell’s waffling tone on another interest rate hike taken by investors as a dovish shift.
“The whole world has been waiting for the Fed to slow down, to pause, to signal that they’re done,” said Steen Jakobsen, Saxo Bank’s chief investment officer, in an interview in Tokyo.
A peak in Fed rates could help lift the Nikkei as high as 34,000 by year-end, Jakobsen said.
“I think it could be a happy Christmas for Nikkei.”
The Nikkei gained 1.12% to 31,954.48 as of the midday recess, after hitting 32,087.13 for the first time since Oct. 18.
Of the Nikkei’s 225 components, 136 rose, 88 fell and one was flat.
The broader Topix added 0.63%. A 1.04% rally in a Topix index of growth shares far outpaced the 0.25% rise for a value share index.
For the week, the Nikkei is up 3.11%. Japanese markets will be closed for a public holiday on Friday.
Chip-testing equipment maker Advantest, which is one of Jakobsen’s top three Japan stock picks, surged 9.25% to be the Nikkei’s top percentage and points gainer for a second day.
Jakobsen also singled out Shin-Etsu Chemical, because of its role in the semi-conductor supply chain, and Nintendo. The stocks were up 3.29% and 0.81% on Thursday, respectively.
Transport equipment was the top gainer among the Tokyo Stock Exchange’s 33 industry sectors, advancing 1.99%.
