Roundup: Tokyo stocks rebound after Nikkei’s lowest level for this year last week

TOKYO: AUGUST 23 – Tokyo stocks finished higher on Monday due to dip-buying after Nikkei’s lowest finish for this year late last week and growing speculation that Japanese Prime Minister Yoshihide Suga may prompt his government through additional stimulus measures to gain popularity after a defeat of his close ally.

The 225-issue Nikkei Stock Average finished 480.99 points, or 1.78 per cent, higher from Friday at 27,494.24.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange closed 34.46 points or 1.83 per cent, higher at 1,915.14.

Trading volume on the main section fell to 944.16 million shares from Friday’s 1,231.97 million shares.

After the Nikkei index went down around 2 per cent in two days through Friday to its lowest level since Dec. 28, 2020, Tokyo stocks rebounded Monday as market participants scooped up battered shares.

Dip-buying has kicked in since investors believed that the market overacted on Toyota Motor Corp.’s announcement that it was cutting global output by some 40 per cent next month compared to its initial plan, brokers said.

In addition, the loss of Hachiro Okonogi in the Yokohama mayoral election on Sunday is also a reason for stocks’ gains, they said. Okonogi received support from Suga and some other members of his ruling Liberal Democratic Party (LDP) in the election.

The election outcome, deemed as a gauge for Suga’s popularity, aroused speculation that his Cabinet may come up with additional economic measures against the COVID-19 pandemic fallout, in a bid to regain his approval ratings and win the House of Representatives election due in the fall, the brokers said.

Norihiro Fujito, the chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co., said, “Investors are expecting a stimulus package, and that is likely to lift stocks,” adding that he does not see any adverse impact on the LDP’s election performance even if Suga is replaced.

The Nikkei index will possibly remain weak, moving between the 27,000 and 28,000 lines in the short-term amid the spread of the highly contagious Delta variant, he said.

However, he added that toward the end of fiscal 2021, the index is likely to rise based on a large number of upward revisions on the earnings outlook for the current business year ending in March 2022 by many major firms.

By the close of play, marine transportation, transportation equipment, and electric appliance issues led to the rebound. Gaining issues outnumbered declining ones 1,939 to 201 on the First Section, while 50 finished unchanged.

Toyota Motor ended with a 3.4 per cent increase, the first time in six sessions.

Shipping issues bounced back after last week’s heavy selling. Among them, Nippon Yusen rose 4.5 per cent, Mitsui O.S.K. Lines jumped 5.4 per cent, and Kawasaki Kisen surged 6.3 per cent.