Japan’s Nikkei Stock Average Gains 2％ as Yen Slides on PM Ishiba’s Dovish Remarks (Update 2)

Reuters

12:00 JST, October 3, 2024 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average rose 2% on Thursday, buoyed by a softer yen as Prime Minister Shigeru Ishiba’s dovish comments reduced bets of further tightening in monetary policy.

The Nikkei closed 1.97% higher at 38,552.06, while the broader Topix finished up 1.2% at 2,683.71.

Ishiba said Japan is not in an environment for an additional rate increase, in an apparent effort to shake off his reputation as a monetary hawk, after a meeting with Bank of Japan Governor Kazuo Ueda on Wednesday.

The yen touched a six-week low against the dollar, after rallying in the wake of Ishiba’s win in the ruling Liberal Democratic Party’s leadership election on Friday.

The yen and Japanese stocks tend to move in opposite directions, since a stronger domestic currency hurts exporters’ competitiveness when repatriating revenue.

The Nikkei’s gains slowed somewhat as the index neared the psychologically significant 39,000 level.

There’s a growing focus on how the new administration’s economic policies will shape up, said Maki Sawada, an equities strategist at Nomura Securities.

“With those factors somewhat uncertain, it could temporarily weigh on the stock market,” although a weaker yen looked poised to support equities on Thursday, she said.

Ishiba had previously said he would beef up taxation on investment income and that there was room for corporate tax hikes. He has however begun to back-pedal on his focus on fiscal discipline.

Gains were broad-based on the Nikkei, with 181 of the 225 constituents advancing. Shares of exporters gained on the back of a softer yen. Sony Group rose 1.1% and automaker Toyota Motor gained 1.3%.

Big technology shares tracked their U.S. peers higher and added to the Nikkei’s rally.

Chip-related shares Tokyo Electron and Advantest climbed 2.7% and 4.7%, respectively, while AI-focused startup investor SoftBank Group was up 2.4%.

Nikkei heavyweight Fast Retailing surged 3.7%, after the Uniqlo parent said on Wednesday that domestic store sales rose in September.