Tokyo stocks close higher due to strong earnings and weaker yen

The Tokyo stock market saw a modest increase on Friday, driven by positive earnings reports from companies and a weaker yen. The Nikkei Stock Average rose by 58.52 points or 0.15 percent to close at 39,572.49, while the broader Topix index also gained 6.73 points or 0.24 percent to finish at 2,788.66.

The day’s gains were led by sectors such as securities, nonferrous metals, and marine transportation on the Prime Market. The U.S. dollar saw some fluctuation against the yen, initially dropping due to uncertainty surrounding U.S. tariff policies but later rising to the upper 154 yen range in Tokyo trading.

During trading hours, the dollar was trading at 154.65-66 yen, while the euro stood at $1.0403-0405 and 160.89-93 yen. The yield on the 10-year Japanese government bond also experienced an increase, reaching 1.240 percent. This rise was attributed to expectations of the Bank of Japan continuing to raise interest rates.

Although stocks briefly dipped into negative territory in the morning, they rebounded due to better-than-expected earnings reports from various companies. Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities Co., noted that overall earnings results were satisfactory, prompting investors to reacquire stocks that were perceived as undervalued.

The depreciation of the yen also played a role in boosting investor sentiment. A weaker yen is beneficial for exporters, leading to increased profits when overseas earnings are repatriated. However, there was a sense of caution among investors, preventing the market from reaching higher levels. This caution stemmed from concerns about U.S. President Donald Trump’s announcement of plans to impose 25 percent tariffs on goods from Canada and Mexico in early February.

In conclusion, the Tokyo stock market ended on a positive note, supported by strong earnings reports and currency movements. Despite some initial uncertainty, the market showed resilience and managed to close higher, driven by a combination of earnings optimism and external factors influencing currency valuations. Investors will continue to monitor developments in the global economy and policy decisions that could impact market trends in the coming days.