Japan’s Nikkei rises more than 3%, leads Asian stock market rally

On a busy morning in Tokyo’s financial district, the Tokyo Stock Exchange saw remarkable activity, with Japan’s Nikkei 225 index rising 3.64%, crossing the 38,000 mark for the first time since early August. The surge capped the index’s most impressive week in four years, rising a surprising 8.67% over the week, according to FactSet data.

The broader Topix index was not far behind, rising 2.99% to close at 2,678.6, up 7.86% from the previous week.

Global economic data fuels optimism

The rally followed positive economic signals from the United States, where July retail sales beat expectations with a 1% increase, significantly above the 0.3% forecast. Also, a decline in weekly jobless claims helped ease concerns about an impending recession.

Stephanie Roth, chief economist at Wolfe Research, commented: “The strong retail data, coupled with favorable jobless claims, are reassuring indicators that the U.S. economy remains resilient despite recent slowdowns.”

A broader rally in the Asian market

The upbeat mood extended across Asia. Singapore reported a 15.7% year-on-year increase in domestic non-oil exports for July, a sharp rebound from the previous month’s decline and well above forecasts. That contributed to a 13.7% increase in total trade for the month.

South Korean markets also bounced after a national holiday, with significant gains seen in both the primary and small-cap indices. Australia’s S&P/ASX 200 rose 1.34%, even as talk of potential rate cuts heated up following the latest inflation data.

Reserve Bank of Australia Governor Michelle Bullock provided insights into the monetary policy outlook, highlighting the ongoing challenge of high inflation and tempering expectations of immediate rate cuts.

Looking forward

Investors also kept an eye on Hong Kong and mainland China, where market movements were mixed, and awaited GDP announcements from Taiwan and Hong Kong, which are due after the market close.

This week’s financial developments in Asian markets highlight the dynamic interplay between regional economic data and global market movements, underscoring a cautiously optimistic outlook for the broader economic landscape.