July 19, 2019 / 7:24 AM / 2 months ago

Japan shares jump as Fed signals month-end rate cut, chip sector lead gains

TOKYO, July 19 (Reuters) - Japanese stocks rebounded solidly on Friday from the previous day’s tumble, as riskier assets got a lift after a senior Federal Reserve official bolstered expectation of a U.S. rate cut later this month, with the semiconductor sector leading the gains.

The benchmark Nikkei share average rallied 2.0% to 21,466.99, following a 2.0% slump on Thursday. The rebound took the index above a few major technical support levels, including 25- and 50-day moving averages.

For the week, the Nikkei posted a 1.0% loss, its biggest weekly drop since late May.

“It’s not surprising to see this kind of technical rebound after yesterday’s selloff. But many investors opted to wait for more and clearer evidence from the upcoming flurry of corporate earnings announcements,” said Yasuo Sakuma, chief investment officer at Libra Investments.

Indeed, turnover on the Tokyo Stock Exchange’s main board was subdued at 1.93 trillion yen ($17.9 billion) versus the daily average of 2.35 trillion yen over the past year. Japan’s April-June quarter corporate earnings season will get underway mid-next week.

Wall Street shares moved higher overnight as comments from New York Federal Reserve President John Williams helped cement expectations for an interest rate cut at the end of this month.

Taking their cues from positive revenue outlook of Taiwanese chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) , Japan’s chip sector rallied with Advantest Corp up 7.1%, Tokyo Electron Ltd 3.5% and Disco Corp 4.2%.

TSMC, the world’s largest contract chipmaker and supplier to Apple Inc, on Thursday posted a decline in second-quarter profit but said demand is likely to recover over the rest of the year, particularly from smartphone makers.

Bucking the overall trend, Japan Post Holdings Co Ltd shed 0.8% to an all-time low after the Nikkei business daily reported the country’s largest private insurance firm Nippon Life requested Japan Post to halt selling its policies at its affiliate post offices.

The formerly state-owned Japan Post and its affiliate companies have faced scrutiny in recent weeks over their sales of insurance policies and toshin fund products.

Elsewhere, Akebono Brake Industry Co Ltd extended its stellar gains, climbing 20.0%, one day after the troubled car parts maker said it will receive about $185 million from a corporate turnaround fund to help restructure its money-losing business.

The broader Topix advanced 1.9% to 1.563.96.

$1 = 107.6000 yen Reporting by Tomo Uetake; Editing by Sam Holmes & Shri Navaratnam

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