The benchmark Nikkei average surged on the Tokyo Stock Exchange Friday on the strength of brisk corporate earnings, surpassing the 22,000 threshold for the first time in almost 21 years and four months.
The benchmark Nikkei 225 average gained 268.67 points, or 1.24 percent, to 22,008.45, closing above the 22,000 threshold for the first time since July 5, 1996. On Thursday, the key market gauge rose 32.16 points.
The Topix, including all first-section issues, closed up 17.15 points, or 0.98 percent, at 1,771.05, the highest closing level since July 20, 2007. The index climbed 2.47 points the previous day.
Stocks attracted purchases due to investors’ growing risk appetite, brought about by brisk earnings reports from major Japanese companies, the yen’s weakening against the dollar and Wall Street’s overnight advance, brokers said.
The dollar’s firmness came after the U.S. House of Representatives passed Thursday a budget blueprint that paves the way for corporate tax cuts and the European Central Bank announced the same day that it will continue its massive monetary easing program while reducing the amount of asset purchases, market sources said.
Although the market environment did not change much from Thursday, “more companies revised up their earnings projections, which created bullish sentiment,” said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.
The ECB’s decision to continue monetary easing also “spread a sense of relief” among investors, Suzuki added.
Investors seem to have set the Nikkei’s next target at 22,666.80, the highest closing level of 1996, marked on June 26 that year, Suzuki said. The target level became conscious as the index climbed to current levels easily after topping 20,000, he said.
Meanwhile, Masayuki Otani, chief market analyst at Securities Japan Inc., explained that Friday’s surge was mainly due to futures-led purchases, possibly by foreign investors.
Buying of major Nikkei components, rather than Topix issues, supported the uplifting of the market, Otani added.
Rising issues far outnumbered falling ones 1,592 to 368 in the TSE’s first section, while 69 issues were unchanged.
Volume rose to 1.991 billion shares from Thursday’s 1.590 billion shares.
Banking issues Sumitomo Mitsui Trust, Mitsubishi UFJ and Sumitomo Mitsui, as well as regional lenders Nishi-Nippon Financial, Chiba Bank and Concordia Financial, were upbeat on higher U.S. interest rates.
Realtors Nomura Real Estate and Daikyo attracted purchases after they announced plans to buy back own shares on Thursday.
JCR Pharmaceuticals was buoyant after it revised up its earnings projections for fiscal 2017 on Thursday. Its industry peer Kyowa Hakko Kirin also attracted purchases on robust January-September earnings announced the same day.
By contrast, electronics makers Fujitsu and Seiko Epson were downbeat on disappointing earnings reports.
Subaru met with selling after news reports that the automaker used unqualified workers for inspections of finished vehicles.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average rose 280 points to close at 22,050.