As a weaker yen helped manufacturers and financial sectors rise after increasing their yearly profit projections, Japan’s Nikkei share average increased on Friday.
The Nikkei is expected to lose 2.4% for the week, despite being up 0.8% at 38,842.13 during the lunch break.
Although the overall Topix has increased by 0.86% to 2,724.35, it is expected to report a weekly loss of 1.49%.
“The yen’s weakness has lifted Japanese shares,” Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory said.
“Gains in European shares and Wall Street’s weak finish overnight suggest that funds that were flown into U.S. equities excessively in Trump trades are now reallocated to other regions.”
After Federal Reserve Chair Jerome Powell tempered investors’ expectations for another interest rate cut this year by stating that the U.S. central bank need not rush to loosen monetary policy, Wall Street’s major indexes ended the day lower on Thursday.
The yen was down 0.1% against the dollar at 156.38, approaching a level that had previously led to Japanese government intervention.
When businesses repatriate their foreign profits to Japan, the value of such profits is increased in yen, which tends to enhance exporters’ shares.
Fueled by strong lending demand and greater margins after the Bank of Japan hiked interest rates in July, Japan’s three largest banks saw a rise Thursday as they upped their year profit estimates to all-time highs.
The Mizuho Financial Group saw a 6.4% increase. Sumitomo Mitsui Financial Group increased by 1.13%, while Mitsubishi UFJ Financial Group increased by 1.2%.
Honda Motor increased 2.3% while Toyota Motor gained 2%.
Following the announcement by Japan’s Diamond Online magazine that activist investor Oasis Management had acquired stock in Nissan Motor, the company’s stock rose 4.7%.
After a filing earlier this week revealed that an entity connected to activist investor Effissimo Capital Management had acquired a stake in the firm, Nissan is expected to report a 6.5% weekly gain.
