Japan's Nikkei ends at over 11-month high as US stocks rally boosts risk appetite

Japan’s Nikkei share average closed at a more than 11-month high on Monday (Jun 30) as investor risk appetite grew after a strong rally in US equities, driven by hopes for trade talks and Federal Reserve’s rate cuts.

The Nikkei rose 0.84 per cent to close at 40,487.39, its highest closing level since July 17. The index narrowed its earlier gains as investors booked profits from the sharp gains of the index, which rose for a fifth straight session.

The broader Topix climbed 0.43 per cent to 2,852.84.

A strategist at a domestic brokerage said a rally of US equities last week and hopes of Fed rate cuts, as well as easing tension in the Middle East, helped investors to turn “risk-on”.

“There are still uncertainties surrounding US tariff policy and geopolitical risks as well as the policy of central banks,” said Takeo Kamai, head of execution services at CLSA in Tokyo.

“But that has become a new normal. The Nikkei is strong enough to head towards the next milestone of around the 42,000 level,” he said.

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Wall Street extended its rally on Friday, sending the S&P 500 and Nasdaq to all-time closing highs as trade deal hopes fueled investor risk appetite and economic data helped solidify expectations for rate cuts from the US Federal Reserve.

In Japan, start-up investor SoftBank Group jumped 4.32 per cent to become the biggest source for the Nikkei’s gains.

Chip-making equipment maker Tokyo Electron and chip-testing equipment maker Advantest rose 0.6 per cent each.

Automakers fell after US President Donald Trump said in an interview broadcast on Sunday that Japan engages in “unfair” automobile trade with the US.

Toyota Motor and Honda Motor lost 1.35 per cent and 1.86 per cent, respectively.

Of more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 54 per cent rose and 40 per cent fell, and 4 per cent traded flat. REUTERS