Nikkei Bounces Back on Tech Gains and Fed Rate Hike Uncertainty

The Tokyo stock market rebounded on Friday after a four-day losing streak, driven by gains in technology and AI-related stocks. The Nikkei 225 index rose 1.26% to close at 65,021, with investors taking heart from comments made by Fed Governor Christopher Waller that he would support keeping interest rates unchanged if inflation continues to ease.

Waller's remarks reduced expectations of a US Federal Reserve rate hike this month, which helped boost Japanese stocks. However, investors are still watching the Bank of Japan for potential action at its September meeting as it seeks to manage inflation.

The yen was also in focus after gaining up to 3% over two sessions. Technology shares led the market higher, with Kioxia Holdings jumping 5.4%, SoftBank Group surging 11.8%, and Taiyo Yuden gaining 6.4%. Advantest and Fujikura also rose by 2.5% and 2.1%, respectively.

Despite Friday's recovery, the Nikkei still fell 2.08% over the week due to higher oil prices and rising global bond yields putting pressure on Japanese equities.