Tokyo's Nikkei jumps 5% after strong US rally

Tokyo's Nikkei jumps 5% after strong US rally

Passersby wearing protective face masks following an outbreak of the coronavirus disease (COVID-19) are reflected on a screen displaying stock prices outside a brokerage in Tokyo. (Credit: Reuters)

Tokyo stocks opened up nearly five percent on Wednesday after a record-setting US rally and relief that the Tokyo Olympics is being postponed rather than cancelled.

The benchmark Nikkei 225 index, which soared more than seven percent on Tuesday to log the best rise since 2016, was up 4.97 percent, or 899.03 points, at 18,991.38 in early trade.

The broader Topix rose 4.54 percent, or 60.57 points, to 1,393.67.

Investor sentiment got a boost from hopes for a massive US stimulus package to counter the impact of the pandemic, as well a deal to postpone the 2020 Tokyo Games until next year.

"A big rise is expected for Japanese stocks after rallies in European and US markets," Okasan Online Securities said in a note.

On Wall Street, the Dow surged 11.4 percent, its biggest one-day percentage increase since 1933, boosted by signs Congress is nearing agreement on a rescue package for the US economy that could amount to more than $2 trillion.

Okasan Online also commented: "Although the exact opening date is yet to be fixed, worries that the cancellation (of the Games) would worsen the economy have receded, supporting Japanese stocks."

The dollar was trading at 111.10 yen against 111.32 yen in New York Tuesday afternoon.

"Risk assets are enjoying a nice rebound," as investors digest the Fed's loosening of credit and the prospect of a big US fiscal stimulus, said Rodrigo Catril, senior strategist at National Australia Bank.

Infection cases with the new coronavirus continue to rise, but encouragingly the rate of spread across Europe is slowing, he noted in a commentary.

But Catril was cautious about the US situation.

"A decline in the rate of increase of infection in the largest world economy would be the ultimate circuit breaker to the current rout in risk assets," he said.

"Right now however there is a lot uncertainty on whether the current US containment measures are going to be enough to contain the virus in the US."

In individual stocks trade in Tokyo, SoftBank Group added 4.22 percent to 3,951 yen after sharp rallies in the past days on a stock buy-back scheme.

Toyota climbed 5.74 percent to 6,612 yen after the auto giant announced a capital tie-up with leading telecom carrier NTT, which rose 1.70 percent to 2,479 yen.

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