Nikkei hits 2-month high on hopes of easing after election

TOKYO Mon Nov 19, 2012 12:18pm IST

People are reflected on an electronic board displaying a graph showing the movement of Nikkei share average outside a brokerage in Tokyo November 7, 2012. REUTERS/Toru Hanai

People are reflected on an electronic board displaying a graph showing the movement of Nikkei share average outside a brokerage in Tokyo November 7, 2012.

Credit: Reuters/Toru Hanai

Related Topics

Stocks

   

TOKYO (Reuters) - The Nikkei average climbed for a fourth day to a two-month high on Monday on growing expectations that Japan's main opposition party will win next month's election and step up pressure on the central bank to ease monetary policy.

A call by Liberal Democratic Party (LDP) leader Shinzo Abe for the Bank of Japan to further stimulate the ailing economy by pushing interest rates to zero or below zero has weakened the yen and boosted the shares of Japanese exporters.

Bellwethers such as Toyota Motor Corp 7203., Nissan Motor Co (7201.T) and Canon Inc (7751.T), which had lost ground because of worries over a looming U.S. fiscal crisis and the euro zone's debt problems, surged between 1.4 percent and 4.5 percent.

The Japanese currency fell to a near seven-month low against the dollar at 81.59 yen on Monday. A weaker yen allows exporters to earn more when they repatriate overseas earnings, as well as boosting their competitiveness.

The Nikkei .N225 advanced 1.4 percent to 9,153.20, comfortably breaking above its 200-day moving average at 9,074.29 and setting its sights on the next resistance level at 9,200.

The broader Topix .TOPX also gained 1.4 percent to 762.16 in heavy trade, with 2.0 billion shares changing hands. The volume was 24 percent above the daily average for the past 90 trading days.

Analysts said that Japanese stocks may stay strong through the general election set on December 16, but profit-taking may be possible as early as this week because of the pace of appreciation.

"Investors are covering their short positions at fast speed now, but they will probably be asking themselves why only Japanese stocks are rising while their overseas peers are weak. They haven't forgotten problems coming from overseas such as the U.S. fiscal cliff," said Hajime Nakajima, a wholesale trader at Cosmo Securities.

"Until there is more clarity and reality in the political climate after the December election, the market may not hold gains."

The benchmark has rallied 5.68 percent in the past four sessions, taking its year-to-date gain to 8.25 percent, slightly ahead of an 8.1 percent rise in the U.S. S&P 500 .INX and a 7.5 percent advance in the pan-European STOXX Europe 600 .STOXX index.

An opinion poll showed on Sunday that the LDP has maintained its lead over the ruling party, strengthening its case to reclaim control of the government in the December election after a three-year absence.

"If the landscape of Japanese politics and monetary policy could be altered by the election, it would be yen negative, equity positive and JGB negative," Bank of America Merrill Lynch said in a note.

Among other gainers, Japan Tobacco Inc (2914.T) jumped 6.5 percent to a three-month high after the Ministry of Finance said on Friday it would not sell shares in the company before the end of December, removing a short-term overhang on the stock.

Fanuc Corp (6954.T) gained 3.2 percent to a two-month high after Deutsche Securities raised the factory automation robot maker's rating to 'hold' from 'sell'.

(Editing by Sanjeev Miglani)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage