Japan’s Nikkei jumps 7 percent, leads world stocks higher

Tokyo

Tokyo stocks soared on Monday as a weaker yen and bargain-hunting drove a rebound from last week’s hammering on global equity markets.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange jumped 7.16 percent, or 1,069.97 points, to 16,022.58, clawing back from a loss of more than 11 percent last week.
The broader Topix index of all
first-section shares skyrocketed 8.02 percent, or 95.95 points, to end 1,292.23, marking its biggest one-day percentage gain since the 2008 global financial crisis.
“Japan is massively oversold,” Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia, told Bloomberg News.
“Everyone is scrambling to get back in. Long-only investors are coming in along with retail and hedge funds. Plus, I would say there’s a lot of short covering going on.”
Tokyo also picked up a positive lead from Wall Street and Europe, where a surge in oil prices and upbeat US and German economic data provided some rare buying confidence.
The dollar rose to 113.95 yen from 113.25 yen Friday in New York and 112.17 yen in Tokyo earlier in the
day — giving a much-needed lift to
exporters.
Among the biggest gainers, Toyota bounced back to close 9.56 percent higher at 6,256 yen. Toyota shares lost 14 percent during last week’s market drubbing.
In other trading, Nissan jumped 6.71 percent to 990.3 yen, banking giant Mitsubishi UFJ surged 8.65 percent to 484.8 yen, while brokerage Nomura soared 10.83 percent to 495 yen.
Sony shares jumped 8.41 percent to 2,447 yen and video game giant Nintendo piled on 9.75 percent to finish at 15,750 yen.
Petroleum-linked firms also rose as world crude prices rebounded, with energy explorer Inpex gaining 7.62 percent to 945.7 yen and JX Holdings up 7.61 percent to 456.5 yen.

‘Having a panic’
Despite the strong rally, it was tough to say when the “unbelievable” drop on world stock markets would end, warned Nicholas Smith, a Japan strategist at brokerage CLSA.
“Most of this is related to the market just having a panic,” he said.
“You cannot talk logic with a drowning man, so you cannot say when the market is going to stop panicking.”
Dealers appeared to shrug off weak Chinese trade data and figures showing Japan’s gross domestic product shrank 0.4 percent in the October-December quarter, or an annual contraction of 1.4 percent.
For the whole of last year growth was a measly 0.4 percent as private spending sagged.
The weak figures will rekindle doubts about Prime Minister Shinzo Abe’s faltering attempt to kickstart the world’s number three economy.
The plan, dubbed Abenomics, has been shaken by a bloodbath on equity markets since the start of the year and a resurgent yen.
The latest figures throw into question whether Abe will follow through with another sales tax hike next year, as Tokyo struggles to push up prices and growth in the wider economy.
The rise is seen as key to containing a spiralling national debt, but it could
further dent spending and hurt the wider economy.
A consumption tax hike in 2014 pushed the country into a brief recession.
“Domestic demand has fallen in three of the last five quarters, suggesting that incomes have not risen by enough in enough households to generate the domestic-led growth that Abe sought,” said Tobias Harris, a political risk analyst at consultancy Teneo.
Last week, the Nikkei tumbled to its lowest close since October 2014, when the Bank of Japan unleashed a second wave of monetary stimulus that sparked a big stock market rally.
Before Monday’s upturn, the Nikkei was down about 30 percent from its summer highs.