Tokyo Market Shakes Crash, Surges to Record : Wall Street’s Advance on Wednesday Adds Punch to Economic Confidence
The Tokyo stock market raced to record levels Thursday, becoming the first in the world to fully shake off the effects of October’s global crash.
And brokers say the best is yet to come.
The Nikkei 225-share index rose 258.05 points, or 0.97%, to close at an all-time high of 26,769.22. It rose 195.82 points Wednesday. Advances slightly led declines in heavy turnover of 1.6 billion shares against 1.2 billion Wednesday.
The previous record was 26,646.43, hit on Oct. 14 just before a dropping dollar and fear of economic problems sent first Wall Street and then worldwide stock markets plunging.
In early trading this morning, the Nikkei rose another 141.68 points to close the morning session at 26,910.90. Volume was a heavy 1 billion shares.
Tokyo’s index sank to a post-crash low of 21,036.76 on Nov. 11, but in recent weeks the market has rapidly recovered, spurred by confidence in the country’s economy.
Securities houses, communications, electrical, precision instrument, real estate, railway/bus, bank, airline, auto, non-life insurance and some manufacturing issues led the winners on Thursday. Gas, construction, fishery and steel shares fell.
Tokyo investors, eager to hear promising news from overseas, took the ball from New York and actively sought out large capital and electrical issues, brokers said.
Masahiro Umemori, a researcher at Nomura Securities, said the stock market was being supported by investor confidence caused by “major Japanese companies, including exporters, shifting their previously export-led management to one driven by efforts to expand domestic demand.”
A 64-point surge on Wall Street on Wednesday was the immediate impetus propelling the Nikkei past the old record within the first nine minutes of trading Thursday morning.
Most brokers and analysts agree that the outlook is bright for the stock market through the rest of the spring, barring a plunge on Wall Street or a fall for the dollar.
Interest on bonds was paid at the end of the fiscal year on March 31, which may mean more money will now trickle into stocks, brokers said.
Some flow of money into stocks is also expected from the abolition of tax incentives for small savings accounts on April 1, they said.
Brokers also said institutional investors were cautious market players up until the end of last month, but now that books are closed for the last fiscal year, these investors can more freely use funds.
But all is not rosy for the market outlook, especially toward the middle of the year, brokers and analysts said.
“(Wednesday’s) rise on Wall Street was a little overblown,” said strategist Craig Chudler of Smith New Court Far East. “If the buying was on the dollar’s strength, that is a bit of a weak basis.”
