Japanese equities rose on Friday, with the broad-spectrum Topix index reaching its highest level in more than three decades after Prime Minister Yoshihide Suga resigned, paving the way for a new government that could help the ruling coalition win the next election.
The Nikkei Index rose 2.04% to 29,128.11 points, the highest level since June 16, while the broader Topix index rose 1.61% to 2015.45, reaching levels not seen since. April 1991.
During the week, the Nikkei gained 5.4% in its biggest gain since the beginning of November, when Joe Biden won the US presidential election.
“Japanese equities have underperformed poorly in recent months, despite a strong recovery in corporate earnings, and the only reason I am in mind is feeling sluggish with the government’s weak response to the pandemic, ”said Takashi Hiroki, chief strategist at Monex Securities.
Suga’s departure is seen as a reduction in the chance that the ruling coalition will lose a stable majority in the upcoming elections to the House of Representatives, which could be held by November. Investors are also betting that whoever Suga’s successor is likely to provide an economic package to support companies and families affected by the pandemic ahead of the election, providing a boost to share prices.
Cyclical stocks such as steelmakers and stockbrokers, as well as semi-chip, they drove the earnings.
The Tokyo Stock Exchange Steel Producers Index rose 4.13%, with Nippon Steel gaining 5.4% and JFE Holdings gaining 6.5%. This is followed by the index of electrical machine manufacturers and securities firms, with gains of 2.4% and 2.3%.
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