Japanese stocks posted strong gains in the holiday-shortened trading week—the Tokyo Stock Exchange was closed on Monday for Respect for the Aged Day. For the week, the Nikkei 225 Stock Average advanced 775 points (3.36%) and closed at 23,869.93, on Friday—up 4.85% for the year to date.
The broad-based TOPIX Index and the TOPIX Small Index also rallied for the week, but they remain in negative territory, down 0.7% and 3.6%, respectively, in 2018.
At the close of trading on Friday, the yen stood at ¥112.7 per U.S. dollar, modestly weaker for the week and virtually unchanged since the end of 2017.
The strong back-to-back weekly gains were fueled by easing global trade tensions and the strengthening U.S. economy, which bolstered the performance of many Japanese commodities and manufacturing companies.
Reuters reports that the Nikkei closed at its highest level since January 24, while the broader TOPIX Index closed at a four-month high. Investors appeared to be optimistic about the next round of trade talks between the U.S. and Japan, slated to take place on September 24.
Prime Minister Shinzo Abe easily won reelection as the leader of the Liberal Democratic Party, defeating former defense minister Shigeru Ishiba.
The victory means Abe will be the prime minister for three more years and potentially become the longest-serving premier in Japan’s history. Abe told reporters that he would reshuffle his cabinet but declined to provide specifics.
On Wednesday, following the Bank of Japan’s (BoJ) September Monetary Policy Meeting, Central Bank Governor Haruhiko Kuroda said that there would be no change to the current monetary policy until inflation reaches the 2% target.
He also cautioned that international trade conflicts could impinge global growth. The BoJ’s statement on monetary policy acknowledged growing domestic demand and "a virtuous cycle from income to spending being maintained in both the corporate and household sectors.”
However, the policy committee cautioned that there were risks to this outlook, including U.S. macroeconomic policy, the consequences of protectionism, developments in emerging and commodity-producing economies, and impacts from Brexit.
Source: G&T
