Tokyo shares open higher after U.S. rally
Tokyo trading began the week on Monday, October 5 with the Nikkei Stock Average climbing 804.28 points, a 1.18% gain that lifted the benchmark to 69,113.74 versus the prior close. The catalyst was Friday's U.S. Employment Report, which revealed September nonfarm payrolls below economist projections, easing fears of a near-term Federal Reserve rate increase. U.S. equities had finished the week on a positive note, and that upbeat tone spilled over into Japanese shares as market participants embraced the improved mood.[S1]
Once trading got underway, the index kept climbing, reaching an intraday advance of about 1,300 points, or roughly 1.9%, relative to the prior close. That pushed the Nikkei above the 69,000 mark for the first time in about six weeks. The preceding session had closed 647.26 points lower at 68,309.46, so Monday's move represented a dramatic turnaround.[S1]
U.S. jobs miss reshapes rate expectations
The U.S. Labor Department's September employment report, published Friday, showed nonfarm payrolls rising only 29,000 month over month, undershooting what the market had anticipated. The jobless rate came in at 4.2%. Payroll readings for July and August were revised lower by a total of 60,000. This softer picture led traders to reduce wagers on an imminent rate increase, which acted as a supportive force for equities.[S1]
All three major U.S. benchmarks ended Friday's New York session in positive territory. The Dow Jones Industrial Average added 250.40 points, or 0.49%, closing at 51,176.96, while the Nasdaq Composite, heavy on technology names, climbed 319.27 points, or 1.19%, to 27,190.86. The S&P 500 advanced 56.27 points, or 0.73%, to 7,722.72. Following the weaker payrolls print, CME FedWatch put the probability of a Fed hike of at least 25 basis points at the end of October at 22.7%, down from 24.4% the prior session and 64.2% a week before.[S1][S2]
Robert Bernstone, who heads trading at SummitTX Capital in New York, described the data as acceptable because it indicated the economy was not overheating, though he cautioned that while the near-term rate hike risk had faded, lingering worries about the economy and inflation kept sentiment cautiously optimistic. He added that a squeeze into year-end, or at least over the coming month or two, was possible simply because the rally was one many investors had disliked.[S2]
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Oil, currencies and sector moves
Crude futures declined after G7 countries agreed to tap strategic oil reserves, adding further support to investor sentiment. As worries about high oil prices subsided, money moved more freely across a wide range of sectors. In currency markets, the dollar traded near 157.80 yen, a touch softer for the yen than the 157.66 level at Friday's Tokyo close.[S1]
On the Chicago Mercantile Exchange, Nikkei 225 futures settled at 69,910 in yen terms, 1,260 points above the Osaka Exchange daytime close, while dollar-denominated contracts ended 1,285 points higher at 69,935. Those futures levels suggested the Nikkei could challenge the 70,000 line. Individual movers included semiconductor-linked Tokyo Electron and Advantest, plus buying in SoftBank Group; Fast Retailing held firm and Kioxia Holdings proved resilient. Toyota Motor was steady and Mitsubishi UFJ Financial Group rose modestly. Electrical machinery, machinery, and glass and ceramics products led sectors, while mining and pulp and paper lagged.[S1]
Across the wider U.S. market, reduced expectations for a near-term rate hike lifted rate-sensitive areas, with the S&P 500 real estate index up 0.4% and the small-cap Russell 2000 up 0.9%, its strongest single-day performance in a month. Mega-caps drove much of the upside, as Nvidia rose 1.3% and Tesla jumped 4.7%, placing both among the S&P 500's largest contributors. Tesla's strength helped push the S&P 500 consumer discretionary index up 1.4%, making it the top performer among the 11 major S&P sectors.[S2]
Even with Friday's advance, the Dow and S&P 500 each posted a fourth weekly loss in five, while the Nasdaq notched a weekly gain, its fifth in six. For the week, the S&P 500 slipped 0.27%, the Nasdaq added 0.45%, and the Dow dropped 1.26%. Nike fell 3.6%, the Dow's worst performer, after the sportswear maker projected a surprise sharp annual revenue decline tied to China weakness, unveiled job cuts and reorganized its global divisions. Data storage names slid, with Western Digital and Seagate Technology each down about 10%, the S&P 500 tech index's weakest. Nikkei reported Toshiba aims to double hard disk drive capacity for AI data centers by fiscal 2027.[S2]
