The Tokyo stock market is counting on an imminent change in Liberal Democratic Party leadership to provide impetus for a positive tone through this month and beyond.
An upturn in share prices in New York coupled with Japanese industry restructuring programs have also helped to improve investor sentiment.
A new Cabinet will be formed after the LDP presidential election is held Tuesday.
As far as the transparency of the election process is concerned, the current race is seen as far better than the behind-the-scenes dealings that resulted in the naming of the incumbent LDP president.
Junichiro Koizumi is the only one of the four contenders who is proposing policies that markedly differ from those currently in place.
The market could react positively should Koizumi triumph, and even Ryutaro Hashimoto’s election would cause little disappointment.
The market usually reacts positively to the formation of a new Cabinet.
Hashimoto should have learned from his failed policy management as prime minister some years ago, and his previous failure is now considered an asset.
With worries about company profits for the first quarter out of the way, share prices on Wall Street have been rising in recent days.
Although earnings reports from Motorola, Yahoo! and other big-name U.S. companies show weak results, they appear to be pulling out of the doldrums.
Intel, Microsoft and other high-tech companies are also expected to lower their earnings estimates in their reports this week, but the reaction to this would be muted as weak results have been largely factored into share prices.
Although many American companies appear resigned to further falls in profits, the market is beginning to count on a future surge in earnings.
There appears to be a good chance that the Nasdaq index will rise back to around 2,400 later this year.
Many Japanese companies will announce their earnings results over the coming weeks, presumably showing positive results from their restructuring programs.
Cutbacks on fixed costs are having the desired effects on earnings.
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