The benchmark Nikkei average advanced to an 8½-month high Monday, with investors delighted by the Liberal Democratic Party’s landslide victory in the House of Representatives election the previous day and the yen’s drop against other major currencies.
The 225-issue average closed up 91.32 points, or 0.94 percent, at 9,828.88, the highest closing level since April 3, after briefly topping 9,900 in early trading. On Friday, the key market gauge edged down 5.17 points.
The Topix index of all first-section issues rose 6.80 points, or 0.85 percent, to end at 807.84, extending its winning streak to a fourth session. The index climbed 1.83 points the previous trading day.
The Tokyo market got off to a strong start following the yen’s decline against other major currencies in overseas markets and rises in index-futures on the election results in preopening trading.
Though failing to rise further after the initial buying ran its course, the market maintained its strength before it trimmed the gains toward the close on a halt in the yen’s drop.
In the election, the LDP and its ally, New Komeito, won a combined 325 seats, more than two-thirds of the 480 Lower House seats. This enables the two new ruling parties to enact any bill in the Lower House even after it is rejected by the House of Councilors.
“Although the market expected that the LDP would score a major victory, it failed to factor in the two-thirds win,” said Hideyuki Suzuki, general manager and head of investment market research department at SBI Securities Co.
Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc., said, “The election results have raised expectations that fresh monetary-easing and other policies pledged by the LDP will actually be implemented.”
Hopes for further improvement in Japanese exporters’ earnings increased as the yen hit a 20-month low against the dollar and fell past 111 to the euro in overseas markets early Monday, before being bought back somewhat in Tokyo trading, brokers said.
Market players will pay a close attention to the Bank of Japan’s two-day policy-setting meeting starting Wednesday. “If the central bank takes no monetary-easing steps, stocks could fall,” Nishi said.
Winners far outnumbered losers 1,033 to 505 in the TSE’s first section, while 156 issues were unchanged. Volume fell to 2.852 billion shares from Friday’s 3.267 billion.
Power utilities soared across the board on hopes for idled nuclear reactors to get restarted under the LDP-led government. Tokyo Electric jumped 3.29 percent to score a daily limit gain, while Kansai Electric shot up 17.64 percent.
Other major winners included shipping firms Kawasaki Kisen, Nippon Yusen and Mitsui O.S.K. Lines, as well as air conditioner maker Daikin Industries and high-tech names Sharp, Sony and Panasonic.
JGBs turn soft
Japanese government bonds softened Monday as Tokyo stocks rallied after the Liberal Democratic Party won Sunday’s Lower House election.
In futures trading, the lead March contract on 10-year JGBs ended down 0.07 point from Friday at 144.23. Turnover dwindled to 24,797 from 43,876.