Japanese equities hit 18-year high

 

Wednesday 04:15 BST. Japanese shares hit an 18-year high as investors remained optimistic that Greece could secure a deal to release a tranche of much-needed financial aid.

The Nikkei 225 rose as much as 0.6 per cent to 20,942.1, its highest since December 1996. On Tuesday, the Japanese benchmark closed up 1.9 per cent at 20,809.4 — a peak last reached in April 2000.

 

It is, however, still roughly half the peak hit in the bubble era a quarter of a century ago. The Nikkei closed at a record 38,915.87 on December 29, 1989, before the bursting of the asset bubble that led to Japan’s economic “lost decade”.

The broader Topix index was up 0.4 per cent at its highest since August 2007. Year to date, the Nikkei is up 15.8 per cent while the Topix has gained 15.6 per cent.

Japanese shares — exporters, in particular — have been buoyed by the weakening yen, which earlier this month fell to its lowest against the US dollar in 13 years amid the Bank of Japan’s quantitative easing programme.

However, comments from BoJ governor Haruhiko Kuroda that the yen was “unlikely to weaken further in real effective terms” have heightened volatility in the Japanese currency, noted Credit Suisse.

Daisuke Takato, Credit Suisse analyst, said company earnings “should be sheltered from exchange rate moves”, and highlighted that 96 per cent of companies surveyed were assuming an exchange rate of less than Y120 to the US dollar in the current financial year.

The yen was 0.1 per stronger on Wednesday morning at Y123.86. In other currencies, the Australian dollar was flat at US$0.7738 while the New Zealand dollar was looking to end a six-session losing streak, up 0.2 per cent to US$0.6866.

Among regional stock markets, Hong Kong’s Hang Seng was up 0.2 per cent and Australia’s S&P/ASX 200 edged up 0.3 per cent.

In China, the Shanghai Composite rose 1.6 per cent. The index fell as much as 4.8 per cent early on Tuesday but staged a late rally to close up 2.2 per cent.

The Shenzhen Composite, which also traded wildly on Tuesday, was up 1.4 per cent.

Chinese bourses were buoyed by a raft of state-backed newspaper editorials that sought to calm investors after the benchmarks last week experienced their worst weekly performance since the depths of the global financial crisis.

US and European markets advanced overnight amid optimism that a deal between Greece and its creditors can be agreed and prevent the country from defaulting on its debts.

Berlin has insisted that Athens has only a few days to pass the economic reforms it has promised its creditors, which could be agreed upon at a eurozone finance ministers meeting later today.

But a last-minute deal might still mean Greece is unable to meet its €1.5bn repayment to the International Monetary Fund, due at the end of this month.

European stocks closed up 0.8 per cent. On Wall Street, the S&P 500 rose 0.1 per cent to 2,124.2, the Dow Jones Industrial Average was up 0.1 per cent to 18,144.1 and the Nasdaq Composite index rose 0.1 per cent after earlier hitting a record peak.

Oil saw its biggest jump in a fortnight, with the price of Brent crude edging up a further 0.2 per cent to $64.55 a barrel after rising 1.8 per cent on Tuesday.

West Texas Intermediate added 0.2 per cent to $61.13 after jumping 2.2 per cent on Tuesday, the most since May 29.

Gold was down 0.1 per cent at $1,177.29 an ounce, its fourth consecutive day of declines.

 

[“source – ft.com”]