TOKYO – Tokyo shares climbed for the third day running Monday, driven by optimism over policy shifts after Prime Minister Shigeru Ishiba said he would resign.
The 225-issue Nikkei Stock Average ended up 625.06 points, or 1.45 percent, from Friday at 43,643.81. The broader Topix index finished 32.89 points, or 1.06 percent, higher at 3,138.20, hitting a fresh record high.
On the top-tier Prime Market, the main gainers were real estate, nonferrous metal and pharmaceutical issues.
In Tokyo, the U.S. dollar remained mostly in the lower 148 yen range as the yen was sold amid speculation that the next Japanese government will pursue an expansionary fiscal policy.
However, it later weakened to the upper 147 yen range as dealers anticipated a U.S. Federal Reserve interest rate cut next week, a move influenced by the release of weaker-than-expected jobs data on Friday, they said.
The Nikkei stock index briefly rose by more than 800 points as shares of export-related machinery and electronics companies were bought due to the weaker yen, which increases the overseas profits of exporters when they are repatriated.
“Stocks rose as Mr. Ishiba’s resignation is seen as heightening expectations for fiscal expansion,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
However, Ichikawa added that Tokyo stocks “would find it difficult to keep rising on expectations for fiscal expansion alone,” noting that the minority government under a new leader will have to strike a balance between opposition parties seeking fiscal expansion and key members of the ruling party who are cautious about cutting the consumption tax.
Sentiment was also lifted by government data released earlier in the day that showed Japan’s economy grew an annualized real 2.2 percent in the April-June quarter, revised up from an initially reported 1.0 percent.
However, some investors were hesitant to buy stocks further due to concerns about the trajectory of the world’s largest economy following the release of U.S. employment data for August, which indicated a slowdown in the labor market.
AloJapan.com