January 17, 2020 / 6:58 AM / a month ago

Nikkei closes at 1-month high as hopes of global demand boost exporters

SINGAPORE, Jan 17 (Reuters) - Japan’s benchmark share index on Friday marked its highest close in a month, after touching a 15-month peak earlier in the session, as hopes for a rebound in global demand and a softer yen drove broad-based gains.

The Nikkei 225 Index closed 0.45% firmer at 24,041.26. In early trading, it scaled its highest level since October 2018, taking gains so far this year to more than 1%. The broader Topix was 0.4% stronger.

“When you look at Japan, you’re not just looking at Japan. Half of earnings at Japanese companies are non-Japanese, so there is a big international story,” said Jim McCafferty, Joint Head of APAC Equity Research at Nomura in Hong Kong.

“As we go into earnings season we are probably going to get guidance from a number of companies that point to a strengthening in global demand.”

The formal signing of the Sino-U.S. trade agreement on Wednesday and the recent easing of tensions in the Middle East have removed uncertainty and fired hopes for a revival in global growth and demand.

Chinese economic data released on Friday, while subdued for the year, included an unexpected jump in factory output and solid retail sales in December, suggesting the world’s second-biggest economy ended the year on a firmer note.

Optimism has also pushed the safe-haven Japanese yen to an almost eight-month low - a boon for exporters. The dollar last traded at 110.23 yen, up 0.08% during the session.

Gains were spread across all sectors of the market, with 167 advancers in the Nikkei index against 46 decliners, led by Japan’s industrial engine room: carmakers, steelmakers and industrials.

“Since investors had already developed concerns about the Chinese economy after seeing Japan’s machine tool orders data slumped in December due mainly to weak demand from China, today’s data soothed some of those market fears,” said Yasuo Sakuma, chief investment officer at Libra Investments, Tokyo.

The largest percentage gainers in the index were Mazda Motor Corp up 5.77%, followed by power-supply equipment maker Fuji Electric Co Ltd gaining 5.61 % and industrial equipment maker Yokogawa Electric Corp rose 4.97%.

Financials found support, too, after Morgan Stanley overnight capped a solid set of fourth-quarter results from Wall Street’s big banks this week, boding well for their Japanese peers.

Nomura Holdings rose 1%, while Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group also gained. (Reporting by Tom Westbrook in Singapore, Additional reporting by Tomo Uetake in Tokyo, Editing by Sherry Jacob-Phillips)

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