The upturn in Tokyo share prices has gathered momentum in recent days, reaffirming the positive shift in market sentiment.
The benchmark 225-issue Nikkei average has climbed past the 14,000 level to hit a year-to-date high and now appears poised to test the 15,300 level.
The biggest morale booster has been the strong rebound in New York share prices.
The Tokyo stock market has apparently bottomed out, with the market forces of supply and demand picking up strongly.
The recent shift in the Bank of Japan’s policy in favor of quantitative monetary easing has helped improve investor sentiment.
The market is also counting on reform-oriented policy moves from Prime Minister Junichiro Koizumi’s Cabinet.
Apparently sensing high-priced activity in the offing, foreign investors have rebuilt their Japanese portfolios in recent weeks.
During the third week of April, foreign investors were net buyers of Japanese stocks for the fifth week in a row, bringing their net purchases since December to 2.2 trillion yen. Following their lead, domestic institutional investors and individual players have moved in.
The market is now awaiting a slew of reports on the economy and company profits, due to be released shortly.
Although economic prospects remain clouded, the easy money policies pursued by both the U.S. Federal Reserve and the Bank of Japan could bode well for both the Japanese and U.S. economies and for corporate earnings.
The Tokyo stock market has reacted positively to the sweeping restructuring program advocated by Koizumi.
On Wall Street, investors are counting on further interest rate cuts and tax cuts.
The Fed’s policy-setting Federal Open Market Committee is expected to slash key interest rates again at its meeting scheduled for May 15.
Against this backdrop, the Dow Jones industrial average on the New York Stock Exchange soared 163.37 points to 10,898.34 Tuesday, its highest close since Feb. 13.
Having fallen below the 1,700 level early last month, the technology-heavy Nasdaq composite index rose 52.05 points to 2,168.29, fueling expectations it will soon hit 2,500.
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