Business / Financial Markets

Nikkei adds 153 points on hopes for another Bank of Japan ETF binge

JIJI

Tokyo stocks bounced back on Friday, helped by speculation about stepped-up purchases of exchange-traded funds by the Bank of Japan.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange gained 152.73 points, or 0.79 percent, to end at 19,498.50, On Thursday, the key market gauge edged down 7.47 points.

The Topix index of all TSE first-section issues rose 13.06 points, or 0.92 percent, to 1,430.04, after losing 8.49 points the previous day.

Tokyo stocks rallied in the afternoon, as their drops in the morning spurred hopes that the BOJ will boost ETF purchases, brokers said.

But the market was top-heavy due to selling to lock in profits and fears of a sharp rise in Japanese coronavirus cases over the weekend. The absence of active buying from foreign investors amid the Easter holidays overseas also capped the Tokyo market’s upside, they said.

“Some investors stayed on the sidelines to see Yaskawa Electric’s earnings results due out later on Friday,” said Hirohumi Yamamoto, strategist at Toyo Securities Co.

The industrial robot producer’s earnings for the year to February are widely viewed as a touchstone for business performance at Japanese firms closing their books in March.

Some market sources attributed the day’s rise to a sense of relief that spread among investors following the U.S. Federal Reserve’s announcement on Thursday of $2.3 trillion in aid to businesses and governments hurt by the coronavirus outbreak.

“While vigilance about the virus crisis remains, the improvement of investment climate in the United States helped change sentiment here for the better,” said an official at a major Japanese brokerage.

Rising issues outnumbered falling ones 1,511 to 608 on the TSE’s first section, while 50 issues were unchanged.

Volume increased to 1.370 billion shares from Thursday’s 1.368 billion shares, due partly to buying and selling linked to Friday’s special quotation fixing to settle April options contracts.

Mega-banks Mitsubishi UFJ, Mizuho and Sumitomo Mitsui attracted purchases after U.S. financials fared well overnight thanks to the Fed’s new loan program.

Clothing store chain Fast Retailing rose as investors were relieved to see that the company’s downward revision Thursday of its projection for consolidated operating profit for the year to August was not far worse than expected.

Among other winners were technology investor SoftBank Group and mobile phone carrier KDDI.

On the other hand, oil issues met with selling, as investors were disappointed with a crude oil output cut of 10 million barrels a day agreed on Thursday at an emergency teleconference of the so-called “OPEC plus” countries, saying the reduction was not drastic enough.

Also on the negative side were automaker Toyota and retail giant Aeon.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average fell 180 points to end at 19,310.

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