FX.co ★ Japanese Market Modestly Higher

The Japanese stock market continued its upward trend on Thursday, building upon gains from the previous session. This performance was influenced by favorable signals from Wall Street overnight. The Nikkei 225 index surpassed the 39,400 mark, with index heavyweights and financial stocks contributing positively, though technology sector shares showed some weakness.

Specifically, the Nikkei 225 index increased by 125.01 points, equating to a 0.32% rise, reaching 39,402.97. Earlier in the session, it had peaked at 39,616.59. On the preceding Wednesday, Japanese shares had closed significantly higher.

Key performers among market leaders included SoftBank Group, which rose over 3%, and Fast Retailing, the operator of Uniqlo, which gained nearly 1%. In the automotive sector, Toyota and Honda both saw increases close to 1%.

Conversely, the technology segment faced challenges, with Tokyo Electron dropping almost 1%, while Advantest and Screen Holdings fell over 1% each.

The banking sector saw positive momentum, with Mizuho Financial and Sumitomo Mitsui Financial each rising more than 1%, and Mitsubishi UFJ Financial nearly hitting a 2% gain.

Among major exporters, Canon added almost 1%, Sony showed a slight uptick of 0.1%, and Mitsubishi Electric gained almost 2%. Panasonic, however, decreased slightly by 0.4%.

In terms of standout performances, Nikon rose over 3%. On the downside, Aeon plunged over 9%, Kawasaki Heavy Industries declined nearly 5%, and Fujikura lost more than 3%.

On the economic front, the Bank of Japan reported unchanged producer prices for September, conflicting with expectations of a 0.3% decline after a 0.2% decrease in August. Annually, producer prices increased by 2.8%, surpassing the forecasted 2.3% and rising from the previous month's 2.6%.

Export prices fell by 0.4% month-over-month but increased 0.5% annually. Meanwhile, import prices dropped 1.3% monthly and 0.4% annually. The foreign exchange rate experienced a decline of 2.0% over the month.

The Bank of Japan further stated that total bank lending in Japan increased by 2.7% year-over-year in September, reaching 624.24 trillion yen, below the anticipated 2.9% rise and down from August's 3.0%. In the third quarter of 2024, overall lending rose 3.0% annually, excluding trusts it grew by 3.3%, and lending from trusts was up by 0.6%.

In currency news, the U.S. dollar was trading in the lower 149 yen range on Thursday.

Turning to Wall Street, a tentative start on Wednesday was followed by gains as investors considered the minutes from the Federal Reserve's recent policy meeting and awaited upcoming data on consumer and producer price inflation for insights into future interest rates. Major indices closed with impressive gains: the Dow advanced 431.63 points or 1.03% to 42,512.00, the S&P 500 increased by 40.91 points or 0.71% to 5,792.04, and the Nasdaq rose by 108.70 points or 0.6% to 18,291.62.

In Europe, major markets also finished higher, with the U.K.'s FTSE 100 up 0.65%, Germany's DAX increasing by 0.99%, and France's CAC 40 closing 0.52% higher.

Crude oil prices declined on Wednesday, influenced by significant increases in crude inventories, which overshadowed potential supply disruptions due to Hurricane Milton and tensions in the Middle East. West Texas Intermediate crude oil futures for November fell by $0.33, or 0.45%, settling at $73.24 per barrel.