June 3, 2020 / 3:43 AM / a month ago

Nikkei rallies to fresh 3-month high; weaker yen lifts auto shares

SYDNEY, June 3 (Reuters) - Japan’s stock benchmark Nikkei advanced to a new three-month high on Wednesday as a rapidly weakening yen and investor fear of missing out a rally boosted automakers and other cyclical sectors.

The Nikkei average gained 1.2% to 22,581.74 by the midday break, after touching its fresh intraday high since Feb. 25 earlier in the session.

The yen rapidly weakened overnight against both the U.S. dollar and the euro, on optimism the worst of the economic downturn from the COVID-19 crisis is over as well as on hopes of additional support from the European policymakers.

The dollar/yen hit a two-month high of 108.850 yen, while the euro/yen hit a 4 1/2-month high of 121.805 yen on early Wednesday.

As a soft yen boosts Japanese manufacturers’ profits made abroad when repatriated, automaker stocks attracted buying.

Mazda Motor jumped 6.8%, while Subaru and Nissan Motor surged 5.8% and 5.2%, respectively.

The broader Topix rose 0.6% to 1,597.18 by the midday recess, with all but six of the 33 sector sub-indexes on the Tokyo exchange trading higher.

Highly cyclical non-ferrous metals, transport equipment and rubber products were the three top-performing sectors on the main bourse.

Bucking the overall market, the index of Mothers start-up shares retreated 1.9%, after marking its fresh 1 1/2-year high earlier in the session.

Analysts said the market has been surprisingly resilient to negative news both domestic and international.

In Japan, the Tokyo government issued a stay-home alert on late Tuesday as the country’s capital recorded 34 new coronavirus cases, the highest since early May.

Meanwhile, U.S. President Donald Trump has threatened to use the military to quell spreading protests against racism and police brutality, but Wall Street stocks rallied on Tuesday, reflecting the global investor optimism. (Reporting by Tomo Uetake; Editing by Arun Koyyur)

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