Tokyo's Nikkei surges near 5% on weak yen, BoJ buying

Tokyo's Nikkei surges near 5% on weak yen, BoJ buying

The Nikkei 225 index shot up 4.91 percent, or 828.77 points, to 17,716.55 in early trade. AFP file photo

Tokyo's key Nikkei stock index surged nearly five in early trade on Tuesday, boosted by a weak yen and aggressive asset-buying from the Bank of Japan.

The Nikkei 225 index shot up 4.91 percent, or 828.77 points, to 17,716.55 in early trade while the broader Topix index was up 2.76 percent or 35.67 points at 1,327.68.

"The dollar's overwhelmingly strong now," said Seiichi Suzuki, senior market analyst at Tokai Tokyo Research Institute.

The dollar was changing hands at 110.91 yen early Tuesday, down from 111.26 yen in New York on Monday afternoon but still sharply higher than 105-107 yen ranges seen a week ago.

A cheaper yen is good for Japanese exporters as it makes their products more competitive abroad while inflating profits when repatriated.

"Also investor sentiment has been supported by the Bank of Japan's buying of ETFs (exchange-traded funds)," he said.

Suzuki also noted overnight drops in New York were not as bad as expected.

Financial firms and energy companies that are heavyweights on the US Dow are not so prominent in Japan, he added.

Global equity markets had mostly tumbled Monday despite fresh stimulus announcements as the economic toll from the coronavirus continued to mount.

The US Federal Reserve unveiled a batch of additional aggressive measures to support the economy, but the boost was countered when divided politicians again failed to agree on key stimulus measures.

The Dow suffered another big drop, this time of 3.0 percent as the New York Stock Exchange completed its first all-electronic session in the wake of the crisis after the exchange suspended floor trading.

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