Japan’s Nikkei index closed higher amid expectations of a cut in interest rates

On Monday, Japan’s Nikkei index closed higher, buoyed by the prospect of interest rate reductions in the United States, which also contributed to gains in the Standard & Poor’s 500 and Nasdaq indices at the conclusion of the previous week’s trading. However, shares of shipping companies experienced a decline due to concerns that the resumption of shipping through the Red Sea would impact costs in the shipping sector.

The Nikkei index saw a 0.26 percent increase, concluding at 33,254.03 points, while the broader Topix index rose by 0.04 percent to reach 2,337.40 points.

In the United States, Friday’s closing saw a mixed performance, with the Nasdaq index joining the Standard & Poor’s 500 in positive territory, while the Dow Jones index marginally decreased. This variation occurred as markets absorbed better-than-expected inflation data, supporting the possibility of the Federal Reserve considering a reduction in interest rates in the new year.

The shares of Japanese shipping companies, which had surged 17 percent the previous week due to expectations of increased shipping costs, faced a setback on Monday. This was attributed to international shipping companies opting for the Cape of Good Hope route to avoid potential disruptions in the Red Sea. Consequently, the shipping company stock index fell by 6.51 percent, marking the poorest performance among the 33 sub-indices on the Tokyo Stock Exchange.

Notably, Kawasaki Kisen shares experienced the steepest decline, falling by 8.6 percent, ranking as the worst-performing stock on the Nikkei index. Nippon Yushin shares and Mitsui Airlines shares also recorded declines of 6.54 percent and 5.62 percent, respectively.

Conversely, Fast Retailing shares rose by 0.62 percent, providing significant support to the Nikkei index among individual stocks. Tokyo Electron shares, representing a chip-making equipment manufacturer, increased by 0.48 percent. On the other hand, shares of Advantest, a company specializing in chip testing equipment manufacturing, fell by 1.49 percent, inflicting the most significant losses on the Nikkei index.