Nikkei Average Ends above 49,000 for 1st Time

Tokyo, Oct. 20 (Jiji Press)–Japan’s benchmark Nikkei 225 stock average on Monday ended above 49,000 for the first time ever, reflecting waning concerns over Japan’s political situation. The Nikkei average closed at 49,185.50, up 1,603.35 points, or 3.36 pct, from Friday, hitting an all-time closing high. Investors’ risk appetite grew following reports that the ruling Liberal Democratic Party and Nippon Ishin no Kai (Japan Innovation Party) reached a substantive agreement to form a coalition. With LDP President Sanae Takaichi now expected to become prime minister, the so-called Takaichi trade, which features stock purchases supported by anticipated expansionary fiscal policy measures, has resumed. The development came after the Tokyo market was caught in risk-averse selling late last week fueled by speculation that coalition talks between the LDP and Nippon Ishin may stall. A rise in all major U.S. equity indexes on Friday, reflecting receding concerns over a possible escalation in the U.S.-China trade dispute and credit woes of the U.S. banking sector, also helped spur buying on the Tokyo market Monday. “Concerns that weighed on the market late last week, such as uncertainties over the Japanese political situation, the U.S.-China trade war and U.S. credit fears all eased, stimulating market participants’ risk appetite,” an official at a major securities house said. Still, a different brokerage house official said, “The biggest factor (behind the surge) was the development in Japan’s political situation.” “Even if there are no major changes in the environment surrounding the Tokyo stock market, such as Japan’s political situation and the U.S.-China trade dispute, the Nikkei average will still exceed 50,000,” a major securities company official said. END [Copyright The Jiji Press, Ltd.]