The 225-issue Nikkei average sprung to a 14-month high Friday, boosted by gains in value stocks such as banks and steel-makers on hopes of a U.S.-China trade deal that would herald robust global growth.
The Nikkei surged 2.55 percent to end at 24,023.10, hitting its highest levels since October last year and marking its biggest daily gain in 10 months.
The index made a decisive break above resistance around 23,600. Its next target is seen at 24,448, a 27-year peak marked on Oct. 2 last year.
The broader Topix gained 1.59 percent to 1,739.98 in heavy volume, with turnover reaching ¥3.442 trillion ($31.68 billion) — the highest level this year.
The United States has agreed to suspend some tariffs on Chinese goods and reduce others, sources said, in return for Beijing’s pledge to hike purchases of U.S. farm products in 2020.
“Markets weren’t expecting the U.S. to reduce the existing tariffs, so if that is true, that would be an additional surprise,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.
Investors rushed to buy value stocks, which have been left undervalued compared to growth stocks. The latter have high valuations because of strong growth expectations, amid bets that a Sino-U.S. trade deal could stabilize the global economy and benefit many companies rather than a selected few.
Financial shares, long maligned by low and negative interest rates, saw sharp gains, with the banking sector index gaining 2.6 percent and insurer index rising 2.3 percent.
The country’s top three banking groups — Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. — rose more than 2 percent.
Among insurers, Tokio Marine Holdings Inc. rose 2.3 percent to a record high, while Dai-ichi Life Holdings Inc. gained 3.5 percent.
Other “old economy” shares also outperformed, with nonferrous metals rising 3.2 percent and shipping companies adding 2.9 percent.
On the other hand, chip-related shares, which have risen in recent weeks on signs of a bottoming-out of the highly volatile technology sector, climbed further on the trade news.
Tokyo Electron jumped 5.9 percent, while Yaskawa Electric Corp. added 5.4 percent and Shin-etsu Chemical Co. advanced 4.3 percent.
Chipmaking equipment-maker NuFlare Technology Inc. gained 11.7 percent after Hoya Corp. announced a counterbid for the firm.
Toshiba Corp. owns 52.4 percent of NuFlare and has said it hopes to buy the rest of the company in a corporate restructuring.
Kura Sushi Inc. dropped 4.1 percent after the sushi restaurant chain operator reported a larger-than-expected fall in earnings in the financial year ended October and gave a soft guidance for the current year.