Nikkei hits nine-month high as Abe takes over as PM

TOKYO Wed Dec 26, 2012 1:09pm IST

An employee of a foreign exchange trading company looks at monitors as a television set shows Japan's incoming Prime Minister and the leader of Liberal Democratic Party (LDP) Shinzo Abe speaking in Tokyo December 26, 2012. REUTERS/Yuriko Nakao

An employee of a foreign exchange trading company looks at monitors as a television set shows Japan's incoming Prime Minister and the leader of Liberal Democratic Party (LDP) Shinzo Abe speaking in Tokyo December 26, 2012.

Credit: Reuters/Yuriko Nakao

Related Topics

Stocks

   

TOKYO (Reuters) - The Nikkei climbed to its highest point in nine months on Wednesday as the yen fell to a 20-month low on expectations that Japan's new prime minister would push for more aggressive monetary and fiscal policies, boosting shares of exporters like Sony Corp (6758.T).

Shares of real estate and financial companies also benefited from hopes for the new government under Shinzo Abe, who was confirmed as prime minister by the lower house of parliament just before the market close.

The benchmark Nikkei average closed up 1.5 percent or 150.24 points at 10,230.36, its high for the day. That marked its loftiest level since March 27, when it ended at 10,255.15.

The broader Topix added 1.2 percent to 847.71.

"The Nikkei will probably keep refreshing its highs until the end of the year, and will likely maintain its strength through February or so on hopes for the new government to draw out a strong economic policy," said Kenji Shiomura, an equities analyst at Daiwa Securities.

Abe's Liberal Democratic Party surged back to power in an election on December 16, three years after a crushing defeat that ended more than 50 years of almost nonstop rule by the conservative, business-friendly party.

He has promised to push for aggressive monetary easing by the Bank of Japan and big government spending to rescue the economy from its fourth recession since 2000.

The yen on Wednesday traded at 85.38 to the dollar, its weakest since April 2011 on expectations that Abe would pressure the central bank to ease its monetary policy more aggressively.

That pushed up shares of exporters, as a weaker yen boosts their overseas earnings when repatriated. Toyota Motor Corp gained 1.3 percent, Nissan Motor Co (7201.T) added 2.1 percent and Sony rose 4 percent.

Property developer Mitsui Fudosan Co (8801.T) rose 1.7 percent. Banking group Mizuho Financial Group (8411.T) advanced 2.0 percent, while brokerages Nomura Holdings Inc (8604.T) climbed 2.8 percent and Daiwa Securities Co (8601.T) gained 2.6 percent.

Buying of Japanese stocks continued despite signs that they were overbought, although trading volume was thin due to the Christmas holiday. Some 2.79 billion shares changed hands on the main board, below last week's daily average volume of 3.53 billion shares.

After rising about 18 percent over the last six weeks, the Nikkei is in "overbought" territory, with its 14-day relative strength index at 75.94. Above 70 is deemed overbought and could signal that a correction is imminent.

"Most foreign funds have added Japanese shares and there are fewer participants today, but there still is a reason for the Nikkei to rise," said Hideyuki Okoshi, general manager at Chibagin Securities.

(Editing by Chris Gallagher)

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

REUTERS SHOWCASE

RBI Policy Review

RBI Policy Review

RBI keeps rates on hold, warns on inflation  Full Article 

Monsoon Season

Monsoon Season

India's 2014 monsoon ends with double-digit rain deficit .  Full Article 

Cleanliness Drive

Cleanliness Drive

Modi orders officials to clean loos on Gandhi's birthday.  Full Article 

Bid to Boost Trading

Bid to Boost Trading

RBI takes small steps to deepen markets.  Full Article 

Car Recall

Car Recall

Maruti Suzuki says to recall 69,555 cars.  Full Article 

China Factory Data

China Factory Data

China final HSBC PMI steady in September on stronger global demand but risks remain  Full Article 

Oil Demand

Oil Demand

India's thirst for oil grows even as China cuts back  Video 

EBay Divests PayPal

EBay Divests PayPal

EBay to spinoff PayPal in 2015  Full Article 

New 'Windows'

New 'Windows'

Microsoft names next operating system 'Windows 10'.  Full Article 

Reuters India Mobile

Reuters India Mobile

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