Japan’s Nikkei Stock Gains as Focus Shifts from Political Shakeup (Update 1)

Reuters

12:38 JST, October 29, 2024 (updated at 17:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average secured a second day of gains on Tuesday, as investors bought back shares after domestic election worries sparked a selloff last week.

Prime Minister Shigeru Ishiba’s coalition lost its parliamentary majority in Sunday’s election in what analysts say is a negative for equities as it raises uncertainty over the path ahead for policy and the economy.

But the market’s focus appears to have moved on from domestic political jitters for now, given an already sizeable fall in shares last week as investors priced in the election risk scenario.

The Nikkei ended up 0.8% at a one-week closing high of 38,903.68 after rising nearly 2% in the previous session, while the broader Topix finished 0.9% higher at 2,682.02.

“Equities prices have declined significantly enough … Now the market is waiting for other big events like the job report and the U.S. presidential election,” said Kenji Abe, chief strategist at Daiwa Securities.

Financial shares rallied on Tuesday, tracking their U.S. peers’ gains as U.S. Treasury yields continued to rise, partly due to speculation that Republican former President Donald Trump could win the Nov. 5 presidential election.

Banks and security firms both climbed 2.5% to lead sector gains.

Wall Street closed higher on Monday ahead of a packed week of earnings from megacap companies, with Google parent Alphabet due to report later on Tuesday.

A portion of Japan’s technology stocks edged up, with AI-focused startup investor SoftBank Group rising 2.9% and chip-testing equipment maker Advantest gaining 1.6%.

Big names in Japan including Advantest are also set to unveil earnings this week, ahead of a key U.S. jobs report on Friday.

Among individual shares on Tuesday, speciality chemicals company Nitto Denko surged 3% to land among the Nikkei’s top percentage gainers after posting earnings following the close of the market on Monday. (Reporting by Brigid Riley; Editing by Nicholas Yong)