Business / Financial Markets | TSE DATA & REPORT

Tokyo stocks rebound strongly after post-election surge on Wall Street

JIJI

Stocks bounced back sharply on the Tokyo Stock Exchange on Thursday, aided by an overnight surge in U.S. equities following the closely watched U.S. midterm elections.

The key 225-issue Nikkei average jumped 401.12 points, or 1.82 percent, to end at 22,486.92. It lost 61.95 points on Wednesday.

The Nikkei gained nearly 500 points at one point in morning trading.

The Topix index of all first-section issues closed up 28.82 points, or 1.74 percent, at 1,681.25, after shedding 6.92 points the previous day.

A sense of relief prevailed in the market as the U.S. elections fell broadly in line with expectations, with the Democratic Party winning back a majority in the House of Representatives and the Republican Party maintaining its control of the Senate, brokers said.

Investor sentiment was lifted also by the yen’s weakening against the dollar, market sources said.

Japanese shares “were bought back because a factor that had made investors retreat to the sidelines is out of the way,” Hiroaki Hiwada, strategist at Toyo Securities Co., said, referring to the elections.

An official at a bank-linked securities firm said the Tokyo market attracted hefty purchases from investors who had been cautious about the possibility of Democrats taking control of both chambers of Congress.

But the official said it will be “very difficult” for the Nikkei to reach the recent highs above 24,000 set in early October due to signs of deterioration in Japan’s economic fundamentals, including dismal machinery orders for September, released just before the start of Thursday’s session.

According to the government data, core machinery orders, or private-sector orders excluding those for ships and power equipment, a key leading indicator of corporate capital spending, plunged 18.3 percent month on month in September after seasonal adjustment, logging the sharpest fall since the current statistics format was adopted in April 2005.

Rising issues far outnumbered falling ones 1,733 to 324 on the TSE’s first section, while 54 issues were unchanged.

Volume fell to 1.537 billion shares from Wednesday’s 1.683 billion shares.

Semiconductor-linked Sumco closed up 4.05 percent after announcing Wednesday that its group operating profit in January-September shot up 2.23-fold from a year before to ¥64.252 billion. The company also said that its operating profit in the full year to December will likely double from the previous year to ¥85.2 billion.

Precision parts maker MinebeaMitsumi was also buoyant on the back of its announcement Wednesday that it has revised up its consolidated net profit estimate for the year to March 2019 to ¥67 billion from ¥66 billion.

Air conditioner maker Daikin and clothing store operator Fast Retailing were among other major winners.

By contrast, automaker Suzuki and industrial machinery maker Yaskawa Electric were downbeat.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average soared 380 points to 22,500.