Japan's Nikkei soars above 62,000 due to earnings and Middle East optimism. JGBs rally
The Nikkei share index in Japan reached a new record high on Thursday, and Japan's bonds also rose as the financial markets reopened following the holidays. This was due to optimism about'strong' technology earnings and signs of a possible peace agreement in the Middle East.
The benchmark Nikkei Index rose by 4.19%, to 62.009.59. It has now broken through the 62,000 barrier for the first ever. The Topix index rose 2.12% to 3,807.84.
After a three-day break in trading, the Japanese government bonds (JGBs), rose on speculation that Tokyo authorities had intervened to boost the yen.
The yen purchased?156.33 for every dollar. This is largely unchanged a day after the yen reached a 10-week-high of 155, which fueled?talks of additional official support.
Wall Street indexes reached record highs over night as Positive Results from Advanced Micro Devices fueled euphoria about?the hot artificial intelligence sector. Iran has said that it will review a U.S. plan to end the war which has lasted for more than two months. President Donald Trump said that the U.S. had held very good discussions with Tehran.
Takamasa ikeda, senior portfolio manager of GCI Asset Management, said that the sharp rise in the Nikkei today was largely due to the "strong performance" of chip stocks, which were driven by Advanced Micro Devices’s positive forecast. The U.S. and Iran peace proposals have a thin content, but the market expects that no further military action will be taken.
The Nikkei Index had 144 advancing companies and 78 declining ones. Ibiden led the tech sector's percentage gainers, with a 15.9% increase, followed by Mitsui Kinzoku Ltd., which gained 15.3% and Renesas Electronics.
The mining and exporter stocks were, however,?widely lower. This is a reversal of gains made during the Iran conflict, when?energy prices soared and the yen was weaker. Inpex, Japan’s leading oil and gas exploration company, fell 5.9%. Honda Motor dropped 0.7%.
Hiroyuki ueno, chief strategy at Sumitomo Mitsui Trust Asset Management said: "The automakers are still weak because the global competition has intensified." "They may also not benefit from the weak yen during the current fiscal period."
The minutes of the Bank of Japan March meeting released on Thursday showed that a majority of board members felt the need to raise interest rates in the event of a prolonged energy shock caused by the Iran War.
The benchmark yield on the 10-year JGB fell by 1.5 basis points to 2.485%. Bond prices and yields are inversely related. The yield on the five-year bond fell by 0.5 basis points to 1.870%.
(source: Reuters)
