TOKYO – Tokyo stocks surged Wednesday, with the Nikkei stock index ending over 5 percent higher, after investor sentiment improved on reports that both the U.S. and Iranian leaders have signaled that the war between the countries could end soon.
The 225-issue Nikkei Stock Average ended up 2,675.96 points, or 5.24 percent, from Tuesday at 53,739.68. The broader Topix index finished 173.04 points, or 4.95 percent, higher at 3,670.90.
On the top-tier Prime Market, the main gainers were nonferrous metal, bank and machinery issues.
The U.S. dollar briefly weakened to the lower 158 yen range in Tokyo, as buying on flight-to-safety demand subsided amid speculation of a cease-fire, dealers said.
At 5 p.m., the dollar fetched 158.79-80 yen compared with 158.66-76 yen in New York and 159.62-64 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.1581-1582 and 183.90-94 yen against $1.1547-1557 and 183.36-46 yen in New York and $1.1472-1474 and 183.12-16 yen in Tokyo late Tuesday afternoon.
The yield on the benchmark 10-year Japanese government bond was down 0.055 percentage point from Tuesday’s close to 2.300 percent, as the debt was bought on expectations that the war between the United States and Iran will end.
Stocks were bought after declining for four consecutive trading days, as President Donald Trump said Tuesday he expects the United States to end the war against Iran within two or three weeks.
Separately, Iranian President Masoud Pezeshkian reportedly indicated the country is willing to end the war if its conditions are met.
“Tail risks of a further surge in crude oil prices will decline,” said Maki Sawada, strategist in the Investment Content Department of Nomura Securities Co., although uncertainty remains over the reopening of the Strait of Hormuz and oil supplies.
The market maintained upward momentum in the afternoon, with the Nikkei stock index finishing over 2,600 points higher, although benchmark West Texas Intermediate crude oil futures stayed over $100 per barrel despite declining.
“As crude oil futures would likely fall to below $100 per barrel at least if the war is truly heading toward an end, many investors likely stayed on the sidelines,” said Shota Sando, equity market analyst at Tokai Tokyo Intelligence Laboratory Co., adding that the market was driven by short-term traders.
AloJapan.com