Tokyo: Nikkei hits 30-year high, financials gain on Democrat control of Senate

[TOKYO] Japanese shares ended higher on Thursday, with the Nikkei touching a 30-year peak, powered by financials as US bond yields climbed on hopes of larger stimulus following a Democrat sweep in two Senate runoffs in Georgia.

The Nikkei average closed 1.60 per cent higher at 27,490.13, hitting its highest level since August 1990 at one point during the session and snapping a four-day losing streak.

The broader Topix added 1.68 per cent to 1,826.30, climbing above a peak hit late last year to reach its highest level since October 2018.

Investor appetite was not dented by the chaos in Washington DC after supporters of President Donald Trump stormed Capitol Hill, forcing Congress to suspend a session to certify President-elect Joe Biden's victory.

"That seemed like the ultimate epitome of four years of Trump's presidency. But no one thinks the election results will be overthrown by this," said Takashi Hiroki, chief strategist at Monex.

Sharp rises in US bond yields boosted shares of Japanese banks and insurers, big investors in US debt.

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Insurer Dai-ichi Life Holdings rose 7.4 per cent. Among banks, SMFG gained 5.5 per cent, while Mizuho added 3.3 per cent and Mitsubishi UFJ rose 3.5 per cent.

Other cyclical, value shares also gained on hopes of a stimulus package from the incoming Biden US administration.

Steelmakers gained 5.2 per cent, with Nippon Steel rising 7.8 per cent. Ship builder Hitachi Zosen surged 13.7 per cent.

The Democrat victory in the Senate fanned renewed appetite in renewable energy stock, with Renova jumping 10.6 per cent to a record high.

Domestic leisure-related shares, such as railway companies , bounced back even as the government looked set to impose a one-month state of emergency in Tokyo and three neighbouring prefectures to curb a spike in Covid-19 cases.

"The economic impact would be much smaller than previous declarations as it is confined to Tokyo and restrictions will be limited," said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

SoftBank Group dropped 1.6 per cent after the news that the Trump administration is considering adding Alibaba Group Holding to its trade blacklist of Chinese companies.

Softbank Group is the largest shareholder of the Chinese e-commerce giant.

REUTERS