Tokyo: Shares end at 30-year peak as global reflation trade ignites rally

[TOKYO] Japanese stocks surged on Friday to close at a 30-year high as expectations of more US fiscal stimulus and rising bond yields set off a cascade of bets that global inflation will accelerate.

The Nikkei 225 Index ended 2.36 per cent firmer at 28,139.03, closing at the highest since August 1990, with raw materials and technology shares leading the gains.

The broader Topix rose 1.57 per cent to 1,854.94 to close at its highest since February 2018.

Global equities got a major boost after incoming US President Joe Biden’s Democrats won control of the Senate that clears the path for his government to use big fiscal spending to stimulate the pandemic-ravaged economy.

The tech sector outlook has brightened after semiconductor makers Samsung Electronics Co Ltd and Micron Technology Inc forecast robust profit and revenue.

“We should expect more fiscal spending and more deficits under Biden,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management Co. “We have a reflationary trade, because we have a weak dollar, stronger equities, higher long-term yields, and higher commodity prices.”

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 stocks that gained the most among the top 30 core Topix names were Murata Manufacturing Co Ltd, up 5.04 per cent, followed by Daikin Industries Ltd that rose 3.81 per cent.

The Topix index for electric machinery makers, which includes many semiconductor-related shares, rose 2.71 per cent to the highest since March 2000.

The underperformers among the Topix 30 were Hoya Corp, down 1.79 per cent, followed by Central Japan Railway Co losing 0.14 per cent.

The Nikkei average in dollar-denominated terms smashed through its peak during the 1989 bubble economy to rise to a record.

There were 193 advancers in the Nikkei index against 29 decliners.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.15 billion, compared with the average of 1.19 billion in the past 30 days.

REUTERS