Nikkei Strikes Two-Month High on Hopes of Financial Easing Post Election
Nikkei average rose 1.3% to a 2-month high on increasing anticipations that the main opposition party of Japan will win the forthcoming election and increase the stress on the central bank for monetary policy easing.
A call by Shinzo Abe (leader of Liberal Democratic Party (LDP)) for the Bank of Japan (BOJ) to stimulate further the poor economy, including shoving the rates of interest to zero or less than zero, has deteriorated the yen and enhance the Japanese exporters’ shares.
On Monday, the Japanese currency dropped to an almost 7-month low against the dollar at 81.59 yen. A weaker yen lets exporters to earn even more when they send back the overseas earnings in addition to enhancing their competitiveness.
The Nikkei (.N225) progressed to 9,144.39 by 120.23 points by the midday session.
A senior trader from a foreign bank told that the investors had been underweight on the equities of Japan and the rally could further go as they begin to invest their money in the market. He told that they advised few of the people to cover the deficits that they had in fields like electronics.
The standard has rallied 5.5% in the previous 3 sessions, bringing its year-to-date profit to 8.2%, a bit more than an 8.1% hike in the United States Standard & Poor’s 500 (.INX) and a 7.5% progression in the pan-European STOXX Europe 600.
The exporters recording steep profits on Monday were Canon Inc (7751.T), Nissan Motor Co (7201.T), Toyota Motor Corp (7203.T), and Fanuc Corp (6954.T), increasing between 1.8% and 3.7%
The broader Topix (.TOPX) progressed 1.4% to 761.64 in heavy trading, with volume at 66% of its complete daily average for the last ninety trading days.
Japan Tobacco Inc (2914.T) increased 6.9% to a 3-month high after the finance ministry told on Friday that it would trade shares in the firm before December end, eliminating a short-term projection on stock.
On Sunday, an opinion poll indicated that the LDP had retained its lead on top of the ruling party, fortifying its case to regain government control in the December election following a 3-year absence.
The brokerage told Nidec Corp (6594.OS), Nissan, and Honda Motor Co (7267.T) were amongst those to profit from a weaker yen, while financial easing would hoist the appeal of the likes of Orix Corp (8591.T) and Mitsubishi UFJ Financial Group (8306.T).