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Tokyo stocks turn sharply higher on Wall Street rally and weaker yen

JIJI

Stocks staged a sharp rebound following their losses over four sessions in a row on the Tokyo Stock Exchange on Tuesday, with investor sentiment brightened by a Wall Street upturn and the yen’s weakening.

The 225-issue Nikkei average gained 375.67 points, or 1.79 percent, to end at 21,417.76, after losing 139.55 points on Monday.

The Topix index of all first-section issues closed up 21.51 points, or 1.27 percent, at 1,716.30. It shed 13.55 points the previous day.

The Tokyo market attracted hefty purchases from the outset of Tuesday’s trading, after the Dow Jones industrial average surged over 330 points to snap its four-session losing streak on the New York Stock Exchange on Monday.

U.S. equities turned buoyant as worries about U.S. President Donald Trump’s planned import tariffs triggering trade wars receded, at least to some extent, as the president hinted at the possibility of refraining from taking the protectionist measure, brokers said.

The yen’s weakening against the dollar added fuel to the Tokyo market’s rally, letting the key Nikkei average gain more than 500 points at one point in the morning, brokers also said.

The market maintained its strength for the rest of the day, although some selling on a rally appeared toward the day’s closing.

“A risk-averse mood weakened as investor expectations grew for flexible trade policy management by the Trump administration,” said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.

On Monday, Trump tweeted: “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.” The United States is now renegotiating the North American Free Trade Agreement with Canada and Mexico.

Traders became less worried about U.S. protectionism as the tweet made them believe that Trump hammered out the tariff plan merely as “a tactic” to conclude a new NAFTA deal in favor of the United States, Ota pointed out.

Some investors, however, are still vigilant against possible sell-offs in the U.S. and Japanese markets because Trump has not yet given up the tariffs, an official at an asset management firm noted.

Rising issues far outnumbered falling ones 1,789 to 237 on the TSE’s first section, while 43 issues were unchanged.

Volume dropped to 1.288 billion shares, from Monday’s 1.510 billion shares.

The weaker yen lifted export-oriented issues, including automaker Toyota and technology developers Yaskawa Electric and Fanuc.

Oil firms JXTG Holdings, Inpex, Cosmo Energy Holdings, Showa Shell and Japex were bought on the back of higher crude oil prices.

Also on the positive side were mobile phone carrier SoftBank Group and clothing retailer Fast Retailing.

By contrast, Daito Trust Construction met with selling after Credit Suisse on Monday lowered the company’s stock price target.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average jumped 460 points to 21,450.