Stocks bounced back sharply Monday, bolstered by buybacks thanks to receding concerns over military action against Syria.
The 225-issue Nikkei average closed up 184.06 points, or 1.37 percent, at 13,572.92. On Friday, the key market gauge sagged 70.85 points.
The Topix index of all first-section issues climbed 11.73 points, or 1.06 percent, to end at 1,117.78, after falling 10.46 points the previous trading day.
The Tokyo market kicked off the week with modest gains, aided by buybacks and buying on dips amid receding worries about geopolitical concerns in Syria.
U.S. President Barack Obama said Sunday that he plans to seek congressional approval for a military strike against Syria over its alleged use of chemical arms, virtually putting off military intervention in the civil war-torn country.
Investor sentiment was also shored up by an improvement in China’s manufacturing industry purchasing managers’ index for August, released Sunday, as well as the first capital spending growth in three quarters among nonfinancial Japanese businesses shown in the April-June corporate activity survey, which was released just before the opening bell, brokers said.
Obama’s decision to ask for congressional approval “gave Tokyo investors temporary relief that there will be no war at least until Sept. 9,” when the U.S. Congress reopens, said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.
In the afternoon, stock prices accelerated their rise on the back of small-lot purchases for index futures after the yen weakened against the dollar, with the Nikkei average briefly jumping more than 220 points, brokers said.
Still, “the Nikkei average is unlikely to climb sharply higher from the current levels around 13,600” prior to a number of closely watched events and economic data in Japan and abroad this week, Suzuki said.
They include the Bank of Japan’s two-day policy-setting meeting from Wednesday, U.S. government jobs data for August, due out Friday, and the host city selection for the 2020 Summer Olympic Games at a general meeting of the International Olympic Committee on Saturday. Tokyo is competing against two other cities for the Olympics.
Rising issues overwhelmed falling ones 1,169 to 467 in the TSE’s first section, while 115 issues were unchanged. Volume fell to 1.853 billion shares from Friday’s 2.220 billion.
Nonbank lenders Aiful rocketed 18.45 percent, Acom jumped 13.53 and Orient Corp. surged 11.59 percent following a newspaper report Monday that their consumer lending has been on a recovery track on the back of a pickup in personal consumption.
General contractors Taisei, Kajima and Shimizu, as well as realtors Mitsubishi Estate and Sumitomo Realty, enjoyed handsome gains on hopes that construction demand will increase if Tokyo is chosen as the host city of the 2020 Olympics, brokers said.
Stock rally clips JGBs
Japanese government bonds lost ground Monday, pressured by a stock rally and wariness over Tuesday’s new 10-year JGB auction.
The lead September futures contract on 10-year JGBs closed down 0.18 point from Friday at 144.17. Volume fell to 14,966 contracts from 17,589.