A man look at an electronic stock indicator of a securities firm in Tokyo yesterday
Japanese stocks posted their biggest gain in nearly seven years yesterday, leading other world indexes higher, as Asian officials sought to counter pessimism about prospects for markets and economic growth.
Japan’s Nikkei 225 index vaulted 7.7 percent to 18,770.51, its biggest one-day rise since October 2008, when markets were volatile during the global financial crisis, and its 10th biggest gain since 1949. Other major Asian markets rose between 2 and 4 percent.
The strong gains come after three months of weakness in stock markets that was partly sparked by the dramatic sell-off in Chinese shares beginning in early June. Economic policy measures in China and Japan were positives for investors yesterday but there were also technical factors at work in the rebound, analysts said.
“Buoyant sentiments were in full display across Asia as regional bourses flashed green,” said Bernard Aw, market strategist at IG in Singapore. “Risk is back in vogue and the European traders clearly embrace it as well,” he said in market commentary.
The Nikkei, which had earlier hit its lowest level since February, bounced after comments from Prime Minister Shinzo Abe that raised expectations of more measures to shore up economic growth under his “Abenomics” stimulus program. The remarks gave an extra boost to Japanese stocks, which some analysts said were lagging behind the recovery this week on Wall Street and other global markets.
“The markets overnight looked much healthier while the Nikkei was still pointing in the wrong direction,” said Ben Collett, head of Japan and Asian equities at Sunrise Brokers in Hong Kong. “The unsexy truth is that this is a lot of people moving to buy stock and not many sellers.”
In written remarks from Abe read to a Bank of America-Merrill Lynch conference in Tokyo, the prime minister pledged to cut corporate tax rates by at least 3.3 percentage points next year. Passage of legislation making it easier to hire temporary workers and reports that Abe plans to keep his current economic team in a cabinet reshuffle next month also appeared to whet investor appetite.
China’s Ministry of Finance helped with a new round of measures to revive growth.
The steps, which include infrastructure spending and reforming taxes for small businesses, follow other recent moves aimed at soothing jittery markets. A rebound in Shanghai shares Tuesday also reinforced faith in Beijing’s interventionist policies to halt sliding prices.
Other Asian benchmarks ended with big gains. South Korea’s Kospi added 3 percent to 1,934.20 and Hong Kong’s Hang Seng climbed 4.1 percent to 22,131.31. The Shanghai Composite Index in mainland China rose 2.3 percent to 3,243.09. Australia’s S&P/ASX 200 gained 2.1 percent to 5,221.10. Kelvin Chan, Business Writer, Hong Kong, AP
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