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Japan stocks lifted by Kishida win, focus turns to his promises

TOKYO: Japanese stock prices hit a one-month high on Monday, buoyed by expectations of a stable government and more fiscal stimulus after Prime Minister Fumio Kishida’s ruling party held on to a majority in a parliamentary election.

The Nikkei share average rose 2.61 per cent, its biggest gain in more than four months, to 29,647, its highest level since late September. The broader Topix added 2.18 per cent to reach a one-month high of 2,044.72.

Kishida’s conservative Liberal Democratic Party (LDP) retained its majority in the powerful lower house in Sunday’s parliamentary election and is expected to roll out an extra budget to support pandemic-hit businesses.

“The market was lifted by a positive surprise of the LDP’s solo majority win at the election. Investors are now more confident in a stable, long-term administration of the party,” said Kentaro Hayashi, senior strategist at Daiwa Securities.

The election outcome removes a layer of political and policy uncertainty for investors who had worried Kishida could follow predecessor Yoshihide Suga as another short-term premier.

Yet, the LDP’s absolute majority could bring attention back to Kishida’s “new capitalism” policies that could mean some softening of corporate governance changes of the past few years.

One particular worry is a plan to hike the capital gains tax, which Kishida had proposed and then dialed back on, but not entirely abandoned. His promise to address wealth inequality has likewise stoked investor concern.

“The election results will boost stock prices in the short term and, by enhancing the risk-on mood, it could be a tailwind for the dollar/yen,” said Osamu Takashima, chief currency strategist at Citigroup.

“But the poll results endorsed his wealth distribution policies to a certain extent. For stock markets that expect reform and growth, they may be a bit underwhelming.”

That disappointment was behind Japanese shares‘ underperformance last month, when the Nikkei fell 2.2 per cent, compared with 6.9 per cent gains in the U.S. S&P500.

Kishida said on Sunday he aimed to compile an extra budget by the end of the year for a stimulus package to support people hit by the pandemic, such as those who lost jobs and students struggling to pay tuitions.

While that provided investors some short-term relief, analysts turned to doubts over what Kishida will deliver.

“While we see the election results as positive for the stock market over the near-term, we will need to keep an eye on the political situation further out,” analysts at JP Morgan wrote.

Foreign investors, in particular, have viewed the more reformist Taro Kono, his chief rival at the LDP’s leadership election in September, as more positive for stocks.

Others were more optimistic.

Takuji Aida, chief economist at Okasan Securities, says there are misunderstandings about Kishida’s policies.

“There’s a misunderstanding that Kishida’s wealth-distribution policy is negative for stocks. It aims to rebuild households by fiscal spending, which should boost consumption and companies’ expected return on investment.”

The U.S. dollar ticked up 0.1 per cent to 114.15 yen, edging near a four-year high of 114.695 touched last month.

Japanese bond markets barely reacted to the election result. Investors see limited increase in bond issuace to finance the upcoming stimulus as the government has a lot of unused cash from previous packages.

The 10-year JGB yield ticked down 0.5 basis point to 0.090 per cent . ($1 = 114.27 yen)

Asian shares today | Asian shares retreat from rally, South Korea raises rates

HONG KONG: Asian shares stepped back on Thursday after a sharp rebound this week, though a solid Wall Street performance overnight contained losses in the region as rising vaccinations offset some of the worries over persistently high COVID-19 cases worldwide.

The global inflationary pulse was also in the headlines as the South Korean central bank raised its base rate by 25 basis points to 0.75%, the first major economy in Asia to do so, after Sri Lanka hiked its base rate last week.

In early trading MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.22%, with declines in Chinese bluechips off 0.81%, Hong Kong down 0.31% and Australia shedding 0.49%.

Japan’s Nikkei gained 0.04%. Korea’s Kopsi was little affected by the central bank hike, falling 0.31% in line with regional moves.

Central banks around the world are laying the groundwork for a transition away from crisis-era stimulus as what began as emergency support for collapsing growth now overheats many economies.

The Asian stock benchmark is still up around 4% on the week, having largely joined a rally in global markets as investors look to the upcoming Jackson Hole Symposium for assurances that the Federal Reserve won’t be rushing in to tighten policy.

However any further gains in equity markets will be limited and a correction is likely by the end of the year, a Reuters poll of analysts found.

Asia is also lagging the rest of the world this year. The MSCI world equity index, which tracks shares in 50 countries is sitting very close to record highs, while the MSCI Asia ex Japan benchmark is off over 12% from record highs hit in February.

“Asia would be doing a lot better if it were not for the

Delta

outbreak. However, we’ve seen at various times over the last 18 months where different regions have led and lagged depending on where they are in relation to Covid-19,” said Shane Oliver, Chief Economist at AMP.

Vaccinations have started to pick up in a number of the countries, raising hopes for the outlook although the rates are still relatively low.

Many countries in the region, from Korea to Southeast Asia and Australia are grappling with a surge in cases of the Delta variant of the new coronavirus, where as the United States could get COVID-19 under control by early next year if vaccinations ramp up, the top US infectious disease expert said on Tuesday.

Overnight, US shares inched higher with the S&P 500 closing at its 51st record high of the year, gaining 0.22%. The Dow Jones Industrial Average closed up 0.11% and the Nasdaq Composite added 0.15%.

Chipmakers and financials drove the gains, helped by a rise in US treasury yields, with the rate on benchmark 10-year Treasury notes rising to 1.349%, the highest since Aug. 13. They last yielded 1.3424%.

“The rock and roll of the thin conditions sees markets swing from pessimistic to optimistic in a matter of days,” said CBA analysts in a note.

“Yields have bounced a fair way from recent lows, catching some on the hop. The market is settling into position ahead of the Jackson Hole meeting on Friday.”

Investors remained focused on what Fed Chair Jerome Powell might say on Friday about tapering the central bank’s bond-buying program when he speaks at the Jackson Hole symposium.

The dollar was little changed in Asian hours sitting around a week low against a basket of major peers, amid the more positive mood in the United States.

Oil

prices fell on Thursday after three days of gains. US crude dipped 0.59% to $67.96 a barrel. Brent crude fell 0.43% to $71.93 per barrel.

us federal reserve chair | Japan’s Nikkei inches lower on caution ahead of Fed chair’s speech

TOKYO: Japan’s Nikkei stock average erased early gains to end lower on Wednesday, as investors turned cautious ahead of US Federal Reserve Chair Jerome Powell’s remarks later this week, offsetting a rebound in Toyota Motor and other related stocks.

The Nikkei share average edged down 0.03% to close at 27,724.80, while the broader Topix inched up 0.08% to 1,935.66.

The Nikkei rose as much as 0.6% earlier in the session, following an overnight solid finish of all three major US stock indexes, with the S&P 500 and the Nasdaq closing at all-time highs.

“There were no particular reasons to boost stocks today except gains on Wall Street, and investors have become cautious about rallies in the US markets,” said Hideyuki Suzuki, general manager at investment research for SBI Securities.

“Toward the end of the week, investors will remain cautious as they await comments at the Jackson Hole meeting.”

On Friday, the Federal Reserve will have its annual economic symposium, traditionally held at Jackson Hole, though this year it will take place virtually due to the pandemic.

The focus remains squarely on Powell’s remarks for any clues regarding the timeline for Fed’s tapering of asset purchases.

Technology shares dragged the Nikkei, with medical services platform M3 losing 1.43%, while chip-related stocks Tokyo Electron and Advantest falling 0.49% and 0.77%, respectively.

Sentiment was also weighed down by concerns about the worsening wave of new COVID-19 infections. Japan is set to expand a state of emergency to eight more prefectures, taking the total to 21, as a surge in cases overwhelms its hospitals.

Toyota Motor, which has shed 3.27% this month, rose 2.29%. Its shares fell recently after it announced a global production cut.

Nissan Motor rose 1.52%, while Toyota’s autoparts maker Denso advanced 2.25%.

Steel makers also climbed, with JFE Holdings jumping 5.07% and Nippon Steel rising 2.79%.

Japan shares today | Japan’s Nikkei crawls up as transport gains; caution remains before Jackson Hole

TOKYO: Japan’s Nikkei inched up in choppy trade on Thursday, lifted by transport shares and Wall Street’s overnight moves, but gains were capped as market participants stayed away from making big bets ahead of the US Federal Reserve’s Jackson Hole symposium this week.

The Nikkei share average edged up 0.06% to close at 27,742.29, after swinging up 0.37% and down 0.14%. The broader Topix edged down 0.02% to 1,935.35.

“The Nikkei gained earlier because the US market was strong overnight, but there was no market-moving catalyst that could lift the market further,” said Takatoshi Itoshima, a strategist at Pictet Asset Management.

“Investors are also cautious as they await the outcome of the Jackson Hole symposium. Also, they are eyeing the upcoming election of Japan’s ruling party.”

The three major US stock indexes ended modestly higher overnight, with the S&P 500 and the Nasdaq posting record closing highs.

In Japan, airlines gained 2.49%, the most among the Tokyo Stock Exchange’s 33 industry sub-indexes, with Japan Airlines and ANA Holdings rising 2.9% and 2.18%, respectively.

Railways rose 1.25%, with Central Japan Railway , which runs bullet trains between Tokyo and Osaka, gaining 1.3%. Tokyo-based East Japan Railway climbed 1.81%.

But their gains were overshadowed by pandemic and political uncertainties. Japan will likely have a general election in October or later if the ruling party holds its leadership race next month as expected, the Sankei newspaper said.

Robot maker Fanuc dragged down the Nikkei the most, falling 1.61%, while staffing agency Recruit Holdings lost 1.28% and Sony Group dropped 1.48%.

Toshiba rose 1.72% after a report that Western Digital was in advanced talks for a potential $20 billion stock merger with Japanese semiconductor firm Kioxia Holdings Corp, of which Toshiba owns 40.5%.

Japan shares today | Japan’s Topix ends at 31-year high as investors eye economic recovery

TOKYO: Japan’s Topix index rose on Monday to its highest level in more than three decades, while the Nikkei also jumped, as investors continued to buy undervalued stocks on hopes of a swift economic recovery and positive corporate outlook.

The Nikkei share average gained 1.83% to close at 29,659.89, while the broader Topix jumped 1.28% to 2,041.22, its highest close since August 1990.

Japan’s market built on its Friday’s upbeat momentum after Prime Minister Yoshihide Suga offered to resign, raising hopes that the ruling coalition could win an upcoming election and avoid political turmoil.

“Investors are now in the process of adjusting their positions of Japanese stocks, which were underweighed because of the country’s low vaccination rate and resurgence of the COVID-19 infections,” said Soichiro Matsumoto, chief investment officer-Japan at Credit Suisse Private Banking.

“But, the vaccination rate will soon match with that of U.S. and Europe and the higher ratio would drive an economic reopening. Towards the end of the year, we can expect more companies to raise their forecast.”

All but four of the 33 sector sub-indexes on the Tokyo exchange traded higher, with shippers surging 8.49%, while financial sectors also gained 2.66% and 2.07%, respectively.

Chip-related shares tracked the Nasdaq, which hit its peak on Friday. Tokyo Electron jumped 2.43% and Advantest gained 2.56%.

Phone companies, which were under pressure to cut rates under the Suga administration, also rose, with KDDI jumping 3.64% and Nippon Telegraph and Telephone gaining 3.67%. They were the best performers among the top 30 core Topix names.

The worst performers of the top 30 core Topix names were Central Japan Railway , which lost 0.35%, followed by Seven & i Holdings, falling 0.22%.

Japan shares | Japan’s Topix hits highest since 1990 on hopes of new govt, better earnings

TOKYO: Japan’s Nikkei hit a six-month high on Friday and the broader Topix index touched its best level since 1990, extending their bull run since the end of August on hopes for a new government and further improvement in earnings.

The news that U.S. President Joe Biden and Chinese counterpart Xi Jinping had held talks on the phone also supported the rally by easing concerns about simmering Sino-U.S. tensions.

The Nikkei average rose 1.25 per cent to 30,381.84, the ninth session of gains in the last ten. For the week, it was up 4.3 per cent.

The Topix gained 1.29 per cent to 2,091.65.

Hopes that a new leader at Japan’s dominant ruling party would compile an economic stimulus and secure a decisive election victory have boosted shares prices after unpopular Prime Minister Yoshihide Suga offered to resign last week.

Expectations are growing that vaccine minister Taro Kono is likely to win the Liberal Democratic Party’s leadership race later this month.

“The market is starting to price in Kono’s victory. He is relatively young and could form a long-standing government,” said Shingo Ide, chief strategist at NLI Research.

Japan’s corporate earnings outlook has also been improving of late as the country’s vaccine roll-outs move closer to catching up with other developed nations.

Financial sectors were among the top gainers after SBI Holdings announced an offer to buy a near majority stake in Shinsei Bank in an unsolicited bid to take effective control of the lender.

SBI rose 7.6 per cent while Shinsei Bank jumped 20.8 per cent after being untraded with a glut of bids for much of the day.

On the other hand, Eisai lost 8.7 per cent after Biogen Inc shares tumbled after it said the launch of its Alzheimer’s drug, which the two firms have developed, was slower than what was initially anticipated.

Nipro shed 7.7 per cent after the medical equipment firm announced the sale of 30 billion yen ($273.47 million) in convertible bonds, which could cause a 13 per cent dilution. ($1 = 109.70 yen)

cyclicals shine | Japan’s Nikkei ends at over 31-year high as cyclicals shine

TOKYO: Japan’s Nikkei closed at a more than 31-year high on Tuesday, led by cyclical stocks tracking overnight Wall Street gains, while progress in domestic vaccine rollouts raised hopes for an economic reopening.

The Nikkei share average ended up 0.73% at 30,670.10, its highest since August 1990. The broader Topix jumped 1.01% to 2,118.87.

“The difference between today and yesterday is that today’s gain is led by a rebound of US stocks,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

“When economically sensitive (cyclical) stocks lead the US market, that works favourably to the Japanese market because Japan has no big growth shares equivalent to GAFA (Google, Apple, Facebaook and Amazon), so the market can’t take advantage of their gains.”

Overnight, the S&P 500 ended a five-day losing streak led by value shares that are set to benefit most from a recovering economy.

Insurance sector led gains among the Tokyo Stock Exchange’s 33 subindexes, jumping 3.67%, followed by shippers , which gained 2.14%.

Refiners gained 2.05% after oil prices rose to six-week highs.

Sentiment was also boosted by hopes for an economic reopening as Japan is on track to reach the vaccination levels of the United States and Europe. The government said on Tuesday more than 50% of Japan’s population have been fully vaccinated.

Technology heavyweights SoftBank Group and Advantest tracked an overnight lower of the Nasdaq , falling 0.49% and 0.18%, respectively.

Tokio Marine Holdings, up 6.2%, was the best performer on the Nikkei, followed by Showa Denko, which jumped 6.19 % and Z Holdings Corp, rising 5.24%.

Konami Holdings fell 2.79 %, making it the worst performer on the Nikkei, followed by Pacific Metals, losing 2.72 % and Tokyo Electric Power Company Holdings , which fell 2.27%.

Japanese shares | Japanese shares give up early gains as investors book profits

TOKYO: Japanese shares settled slightly lower on Monday, giving up early gains driven by cyclical stocks as investors booked profits after a sharp rally this month, while caution also prevailed ahead of a change in political leadership.

The Nikkei share average closed down 0.03% at 30,240.06 after rising as much as 0.5%. The broader Topix slipped 0.14% to 2,087.74.

The Nikkei has risen almost 8% this month on hopes of an economic recovery amid declining cases of COVID-19 infections.

“Early gains were erased as investors tried to lock in profits after a big rally until last week,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

“The sell-off was driven by caution ahead of a change in political leadership, while there are still fears of possible default by China Evergrande.”

Japan’s ruling Liberal Democratic Party is set to hold an election to choose a new leader, who is set to become the country’s next prime minister.

Stocks with an exposure to China continued to be hit as fears of a potential default at China Evergrande loomed. Air-conditioner maker Daikin Industries fell 3.44% and toilet maker Toto slipped 1.84%.

Shippers led the decline among the Tokyo Stock Exchanges 33 industry sub-indexes with a drop of 6.45%.

Shares of companies that benefited from the stay-at-home lifestyle were subdued, after the health minister said the COVID-19 infection situation was improving such that emergency conditions could soon be lifted in most parts of the country.

Gamemaker Bandai Namco lost 2.81% and frozen food maker Ajinomoto fell 2.27%.

Shares that would benefit from an economic reopening advanced, with airlines jumping 3.76% and railway operators rising 1.69%.

Department stores rose, with Takashimaya up 4.04%, Isetan Mitsukoshi gaining 3.66% and Marui Group advancing 2.82%.

Asian stocks | Asian stocks steady as calm returns but jitters keep dollar firm

HONG KONG: Asian shares found some calm on Thursday following this week’s heavy China-driven losses although the

dollar

sat at a more than one-year high against major peers, upheld by lingering safe-haven demand and expectations for tighter U.S. monetary policy.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.06%, while the Nikkei lost 0.36% a day after Japan’s ruling party chose softly spoken consensus-builder Fumio Kishida as its new leader and the country’s new prime minister.

Worries about economic growth in China due to a worsening power crunch combined with fears of a global slowdown, hitting Asian shares on Wednesday.

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However, the dollar index – which measures the U.S. currency against six major currencies – hit its strongest level in nearly 18 months against the yen and in 14 months against the euro. It held these gains in Asian hours, and was last at 94.314.

“(The dollar) is breaking key levels and there was no real resistance to the break so that tells you there was real underlying strength to that,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.

“Sometimes, it can become somewhat of a magical currency,” he said, pointing to the fact that it was supported by both global investors seeking safety and the Fed inching closer to reducing its massive asset purchases. In addition, “the ongoing U.S. debt ceiling stand-off could briefly amplify financial market jitters and support the USD in the short-term,” said analysts at CBA in a note.

U.S. lawmakers continue to wrangle over funding the government but face a Friday deadline to prevent a shutdown approached, something that also capped gains in U.S. equities overnight.

In Asian equity markets, Hong Kong stocks fell 1% but these were largely balanced by a 1.1% rise in Australia.

Chinese blue chips gained 0.5% after data published early on Thursday showed China’s services sector returned to expansion in September after COVID-19 outbreaks receded. However, but factory activity unexpectedly shrank as high raw material prices and power cuts continued to pressure manufacturers.

“It is likely that the power crunch in China will persist until end-2021, as the local governments are under pressure to fulfil emission reduction goals for this year,” said Chaoping Zhu, Global Market Strategist, J.P. Morgan Asset Management in emailed comments.

“Investors might remain cautious on China’s corporate earnings (in the fourth quarter). Meanwhile, the volatile global market is expected to further weigh on investor sentiment in the near term.”

The other main drag on investor sentiment in greater China was embattled developer China Evergrande, whose shares swung back and forth, and were last down 2.2%

The company was due to pay interest on a dollar bond on Wednesday, but Reuters reported that some offshore bondholders had not been paid interest by the end of the Asian day.

Overnight, the Dow Jones Industrial Average and the S&P 500 both posted small gains but the Nasdaq Composite dropped 0.24%.

Oil prices edged lower, extending losses after official figures showed an unexpected rise in U.S inventories.

Brent crude was down 0.14% to 78.53 a barrel, U.S. crude dipped 0.03% to $74.81.

Spot gold traded at $1,731.99 per ounce, near a seven-week low, constrained by a strong dollar.

Asian stocks | Asian stocks extend global slide as inflation fears bite

TOKYO: Asian equities followed Wall Street sharply lower and bonds rallied on Friday as risk sentiment soured amid growing worries that inflation may persist even after global growth has peaked.

Japan’s Nikkei tumbled 1.86%, while the broader Topix slid 1.95%.

Australian stocks slumped 2.05% and South Korea’s Kospi lost 1.51%.

An MSCI index of Asia-Pacific stocks dropped 1.07%.

Chinese markets are closed for a week from Friday for the Golden Week holiday.

“You can argue whether it’s really stagflation or not, but the whole growth-inflation backdrop seems to have just tilted to a less favorable one,” said Rob Carnell, Asia-Pacific head of research at ING in Singapore.

“Whether or not this is actually going to get imbedded and create problems for years to come, we don’t need to know right now – it’s sufficiently scary that what we’re seeing in markets is justified.”

U.S. stock futures pointed to a 0.51% decline for the S&P 500, following a 1.19% drop in the index overnight .

Nasdaq futures also signaled a 0.49% retreat, adding to Thursday’s 0.43% loss.

The benchmark 10-year Treasury note continued to rally in Tokyo trading, with the yield sliding to the lowest since Sept. 28 at 1.48%.

The dollar index, which measures the currency against six major rivals, was off Thursday’s one-year high of 94.504, last changing hands at 94.326.

Federal Reserve Chair Jerome Powell said on Wednesday that resolving “tension” between high inflation and high unemployment is the Fed’s most urgent issue, acknowledging a potential conflict between the U.S. central bank’s two goals of stable prices and full employment.

China has proved a particular worry for investors, hit by regulatory curbs in the tech and property sectors, and now grappling with a power shortage that threatens to push up energy prices globally.

Crude prices continued to ease on Friday after Brent topped $80 a barrel earlier in the week for the first time in three years.

Brent crude futures were largely flat compared to Thursday at $78.32, while U.S. crude futures were also little changed at $75.07.

Gold, an inflation hedge and safe haven, edged back 0.1% to $1,755.35 an ounce, following Thursday’s 1.77% surge, the biggest since March.