Japan's Nikkei rises on SoftBank rally, but set for weekly fall

Japan's Nikkei share average climbed on Friday, after a four-day decline, propelled by a 10% rally in SoftBank Group and bolstered by Wall Street's strong finish the previous night. The Nikkei index surged 0.86% to 64,769.74 by midday, yet fell 2.46% for the week. Technology titan SoftBank Group led the gains, surging 10.28% and becoming the primary driver of the Nikkei's rise.

This was after its chip subsidiary Arm Holdings climbed 3.29% overnight. Another memory chipmaker, Kioxia, also rose 4.94%. The broader Topix index, however, slipped 0.18% to 4,094.48, and was down 1.26% for the week. Analyst Shuutarou Yasuda of Tokai Tokyo Intelligence Laboratory noted that the Nikkei's gains were modest, given the overnight strength of Wall Street.

The Bank of Japan was expected to raise interest rates, which tempered the Nikkei's performance. The Bank of Japan was anticipated to raise rates to 1.25% later in the month, with additional hikes projected for January. US Federal Reserve Governor Christopher Waller suggested on Thursday that he would back a rate hold this month if inflation signs softened.

Japanese government bond yields slumped on Friday, with the 10-year JGB yield dropping 6 basis points to 2.905%. Yasuda attributed SoftBank's sharp gains to falling yields, as the firm leveraged loans to invest in other companies. Japanese trading houses experienced a pullback after their earlier gains, as Berkshire Hathaway CEO Greg Abel indicated the company intended to keep its trading house investments for "many decades".

Berkshire held over 10% stakes in Japanese trading houses Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Mitsui and Mitsubishi Mitsubishi lost 4.32% and 3.26% respectively, dragging down the Topix the most. Banks also dipped, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group sinking 0.32% and 0.95%, respectively.