U.S. ‘cliff’ deal sends Nikkei up nearly 3%

Newly merged bourse soars to 22-month high as trading starts

Kyodo

The benchmark Nikkei 225 stock average climbed to a 22-month closing high Friday, the first trading session of the year, bolstered by the passage of a bill by the U.S. Congress to avert the “fiscal cliff,” as well as the yen’s continued weakness.

The Nikkei index spiked 292.93 points, or 2.82 percent, from the previous session Dec. 28, to close at 10,688.11. The broader Topix index of all first section issues on the Tokyo Stock Exchange soared 28.71 points, or 3.34 percent, to 888.51. Tokyo’s financial markets were closed through Thursday for the yearend and New Year’s holidays.

Picking up their strong rally at the end of the year on hopes of aggressive monetary easing under new Prime Minister Shinzo Abe, all 33 sectors on the TSE posted gains Friday, led by carmakers, tire manufacturers and insurers. Advancing issues outnumbered those in retreat by 1,553 to 110 on the first section of the TSE, while volume ballooned to 3.41 billion shares from the 2.89 billion traded Dec. 28.

Investors were heartened by the agreement by the U.S. Congress Tuesday to increase taxes on high earners to stop plunging off the country’s fiscal cliff, averting steep tax hikes and deep budget cuts, at least in the short term. The market was also supported by the yen’s slide against the dollar and the euro.

“The demand-supply conditions are excellent in the market” at the moment, said Hiroichi Nishi, assistant general manager at SMBC Nikko Securities Inc. “Investors can now sell stocks at high prices and use that money to buy other shares.”

The Nikkei has climbed some 23 percent since mid-November, after then-Prime Minister Yoshihiko Noda dissolved the Lower House to hold the Dec. 16 general election. The Liberal Democratic Party, Japan’s traditional postwar party of governance, scored a resounding win, returning to power after three years in the opposition and allowing Abe to unveil his new Cabinet Dec. 26.

“As seen in the high trading volume and value, foreign investors continue to be bullish about Tokyo stocks,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. “The only concern is the pace of the market’s ascent. This rally may last another week, but there should be some correction in the near term.”

Meanwhile, the Japan Exchange Group Inc., created earlier this week through the merger of Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co., went public Friday on the TSE’s first section.

“We aim to become the No. 1 market in Asia, attracting investors from around the world by developing appealing products,” Atsushi Saito, head of the new holding company, said in a ceremony held at the TSE.

The stock of the new group, which was formed Tuesday and is the fourth-largest in the world in terms of the market value of listed firms, fetched an opening price of ¥3,740 and ended the morning trading session at ¥3,885, up 3.7 percent.