Japan’s Nikkei closes at 32-year high as US default fears ease

By Rocky Swift

TOKYO (Reuters) – Japanese stocks rose on Friday, with the benchmark index closing at a three-decade high, after U.S. lawmakers voted to raise the debt limit and on signs central bankers are in no hurry to tighten the monetary policy.

SoftBank Group Corp rose 4.3% amid speculation its chip unit will benefit from a boom in artificial intelligence investment. T&D Holdings, Inc leapt 4.28%, leading insurers higher as risks of a financial catastrophe from a U.S. default evaporated.

The Nikkei index advanced 1.21% to 31,384.93, the highest close since July 1990. The broader rose 1.55% to 2,182.70. 

Major U.S. equity indexes closed at their highest levels since August 2022 after resilient labour market data added to optimism that the Federal Reserve can steer the economy to a soft landing.

The U.S. Senate passed bipartisan legislation backed by President Joe Biden that lifts the government’s $31.4 trillion debt ceiling, averting what would have been a first-ever default.

Back home, Bank of Japan Governor Kazuo Ueda told lawmakers the central bank did not have a time-frame for achieving its 2% inflation target.

The Nikkei climbed 2% over the past five sessions, clocking in an eighth straight weekly advance. Among its members, 202 stocks rose in value on Friday versus just 16 that fell. 

“Despite the rise in the Nikkei, there’s been a trend where decliners on the Prime Market outnumbered gainers,” said Maki Sawada, a strategist at Nomura Securities.

“However, in the Nikkei’s climb over the past few days, the number of stocks gaining in price has been increasing, so that suggests the index is being bought more broadly,” she added.

Among the Tokyo Stock Exchange’s 33 industry sectors, indexes tracking paper makers and transport equipment companies were the biggest gainers, rising more than 2.6%. A basket of sea transport companies traded flat.