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Stocks surge in Tokyo following Fed rate hike

JIJI

Stocks rose sharply on the Tokyo Stock Exchange on Thursday, backed by brisk purchases after a U.S. interest rate increase led to a surge on Wall Street and a weaker yen.

The Nikkei average shot up 303.65 points, or 1.59 percent, to end at 19,353.56. On Wednesday, the it surged 484.01 points.

The Topix climbed 23.99 points, or 1.56 percent, to close at 1,564.71, after rising 38.17 points the previous day.

The Tokyo market rose across the aboard after the U.S. Dow Jones industrial average closed at the highest level in some two weeks on Wednesday, after the U.S. Federal Reserve raised interest rates.

Investors felt a sense of relief after Fed Chair Janet Yellen indicated the U.S. central bank’s cautious stance on future rate increases, brokers said.

The yen’s weakening against the dollar amid hopes that the interest rate gap between Japan and the United States will widen spurred buying of automakers and technology issues, brokers said.

In the afternoon, the market’s topside became somewhat heavy after profit-taking weighed on mainstay export-oriented names, brokers said.

“The Fed’s rate hike reflects a U.S. economic recovery. The expected moderate pace (of future interest rate increases) is also positive for investors,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co. “The Fed’s decision turned out the best for market players,” Miura said.

“Excessive uncertainty has dissipated,” said Mitsuo Shimizu, equity strategist at Japan Asia Securities Co., referring to the course of U.S. monetary policy. Yellen’s remarks on the pace of future rate increases are “considered to mean she is holding a close dialogue with the market,” Shimizu said.

But “selling to lock in profits increased in the afternoon after the Nikkei briefly topped its 200-day moving average,” which stood at 19,500.36 as of Wednesday, Shimizu said.

Slumping crude oil prices and a Chinese economic slowdown may be risk factors, but Tokyo stocks are expected to test their upside toward the end of this year now that the biggest event of 2015 was over, brokers said, referring to the Fed’s monetary policy meeting.

Rising issues outnumbered falling ones 1,589 to 251 in the TSE’s first section, while 88 issues were unchanged.

Volume increased to 2,248 million shares from Wednesday’s 2,129 million shares.

Sony jumped 2.36 percent on a report that the electronics maker will release a new battery in 2020 to allow smartphones and other mobile devices to run 1.4 times longer.

Other mainstay exporters were upbeat as well, thanks to the weaker yen. Among them were automakers Toyota and Honda, as well as electronics manufacturers Canon and Hitachi.

Companies linked to demand from foreign visitors to Japan were buoyant after government data showed Wednesday the estimated number of such visitors climbed 47.5 percent in the first 11 months of this year from a year before. They include drug store operator Matsumoto Kiyoshi, cosmetics maker Shiseido and daily goods maker Kao.

By contrast, Kobe Steel and Nippon Steel & Sumitomo Metal were downbeat, along with nonbank lender Orient and heavy machinery maker Mitsubishi Heavy Industries.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average climbed 250 points to end at 19,340.