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Nikkei hits two-year high on weaker yen, overseas stock gains

JIJI

The benchmark Nikkei average reached the highest closing level in more than two years on the Tokyo Stock Exchange Monday, supported by the yen’s weakening against the dollar and higher U.S. and European equities late last week.

The Nikkei 225 average rose 44.50 points, or 0.22 percent, to end at 20,400.78, its highest closing since Aug. 18, 2015. On Friday, the key market gauge lost 6.83 points.

But the Topix, including all first-section issues, closed down 1.13 points, or 0.07 percent, at 1,673.62, after falling 1.42 points the previous trading day.

Stocks got off to a firm start and gained ground after the dollar strengthened on the back of the brisk Chicago purchasing managers index for September and media reports that U.S. President Donald Trump has met with potential Federal Reserve chair candidates who are viewed as having “hawkish” monetary policy stances, brokers said.

The Tokyo market was also backed by robust overseas stock markets on Friday, in which the Dow Jones industrial average rose for the third straight day and the tech-heavy Nasdaq composite index hit a closing high, brokers said.

Individual investors showed appetites for small-cap issues in the Tokyo market, but large-cap issues remained downbeat, leading to the fall of the Topix, market sources said.

“Domestic and overseas institutional investors were absent from Monday’s trading,” said an official of a bank-affiliated brokerage firm, explaining that trading was therefore thin.

Potential trading factors, including the Bank of Japan’s tankan quarterly business sentiment survey for September, released early in the morning, failed to motivate such investors, who seemed to be waiting for the overseas markets to open later on Monday, the official said.

Meanwhile, “individual investors moved for bargain hunting while also purchasing the stocks of companies expected to post brisk earnings,” Yoshihiko Tabei, chief analyst at Naito Securities Co., said, adding that futures-linked buying by foreign investors may be another reason for Monday’s rise.

But overall, the Tokyo market seemed to be in a standstill, with investors unable to take positions after major economic indicators have been released and as a further weakening of the yen is unlikely to happen for the time being, Tabei said.

Rising issues outnumbered falling ones 1,116 to 838 in the TSE’s first section, while 76 issues were unchanged.

Volume fell to 1.355 billion shares from Friday’s 1.731 billion shares.

Mobile game site operator Gree was buoyant after it revised up its earnings estimates for July-September.

Mining firm Sumiseki Holdings attracted brisk purchases and briefly posted a daily-limit gain after announcing last week that it will receive massive dividends from an Australian coal mine owned by a subsidiary.

House Foods briefly scored a listing-to-date high after Mizuho Securities revised up its investment rating and stock price target for the company.

By contrast, automaker Nissan was downbeat after it announced Friday that final inspections of new finished vehicles had been conducted by unauthorized employees.

Drug store chain operator Sugi Holdings met with selling due to disappointing earnings for the fiscal first half that ended in August.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average rose 70 points to end at 20,410.