Tokyo: Nikkei rallies to over 3-month high; weaker yen lifts auto shares

[SYDNEY] Japan's stock benchmark Nikkei advanced to a more than three-month high on Wednesday, as a rapidly weakening yen and a so-called fear of missing out, or "FOMO", from investors boosted automakers and other cyclical sectors.

The Nikkei average gained 1.3 per cent to 22,613.76, its highest closing level since Feb 21.

The yen rapidly weakened overnight against both the US dollar and the euro, on optimism the worst of the economic downturn from the Covid-19 crisis is over as well as on hopes of additional support from the European policymakers.

The dollar/yen hit a two-month high of 108.850 yen, while the euro/yen touched a four-and-a-half month high of 121.805 yen early Wednesday.

As a soft yen boosts Japanese manufacturers' profits made abroad when repatriated, automaker stocks attracted buying.

Mazda Motor soared 9.1 per cent, while Nissan Motor and Subaru jumped 7.5 per cent and 6 per cent, respectively.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The broader Topix rose 0.7 per cent to 1,599.08, its highest closing since Feb 26, with all but five of the 33 sector sub-indexes on the Tokyo exchange ending firmer.

Highly cyclical non-ferrous metals, transport equipment and rubber products were the three top-performing sectors on the main bourse.

Bucking the overall market sentiment, the index of Mothers startup shares retreated 1.2 per cent, after marking a fresh one-and-a-half year high earlier in the session.

Analysts said the market has been surprisingly resilient to negative news, both domestic and international, but a sense of short-term overheating capped gains.

Japan issued a stay-home alert late Tuesday as the country's capital recorded 34 new coronavirus cases, the highest since early May.

Meanwhile, US President Donald Trump has threatened to use the military to quell spreading protests against racism and police brutality, but Wall Street stocks rallied on Tuesday, reflecting the global investor optimism.

REUTERS