Nikkei up sharply as Aso hints at intervention


Stocks rose sharply Thursday after Finance Minister Taro Aso’s comments about possible currency market intervention pushed down the yen.

The Nikkei 225 average rose 309.25 points, or 2.12 percent, to close at 14,876.41, its best finish since May 22. The Topix gained 14.36 points, or 1.19 percent, and finished at 1,218.55, the highest closing level since Sept. 26.

The TSE opened on a strong note thanks to a recovery in New York stocks overnight. The Dow Jones industrial average closed at a fresh record high on the back of hopes for good yearend sales after U.S. retailers reported upbeat earnings.

Investors also took heart from Japan’s gross domestic product data released early in the morning that showed the economy expanded at an annualized 1.9 percent in real terms in July-September. The figure was slightly better than the market’s consensus estimate.

In the afternoon, the Nikkei shot up and edged close to the psychologically important 15,000 mark after Aso hinted at the possibility of intervening in the currency market, which dragged down the yen and prompted futures-led buying in the stock market, brokers said.

Expectations grew that the U.S. Federal Reserve’s quantitative easing will stay in place for a prolonged period after it was reported that Fed Vice Chairwoman Janet Yellen, in her confirmation hearing Thursday as the successor to Fed Chairman Ben Bernanke, would note that the U.S. unemployment rate still remains at high levels, brokers said. The text of her testimony was released Wednesday.

But there are mixed views in the market over whether prolonged easing by the Fed would send the dollar lower and put upward pressure on the yen as some fear, said Hiroichi Nishi, equity general manger at SMBC Nikko Securities Inc.

In addition, signs are becoming more clear that the Nikkei is finally breaking out of its recent narrow range and is set to climb higher, he said, citing various factors supporting the market, such as the good supply-demand balance and excess money flowing around global financial markets.

JGB futures bounce back

Japanese government bond futures rebounded Thursday, helped by higher U.S. Treasury securities and the day’s smooth auction of new five-year government notes.

The lead December contract on 10-year JGBs finished up 0.12 point from Wednesday at 145.02. Volume surged to 26,076 contracts from 20,182.