Japan, Other Foreign Markets Surge Again
Japanese investors paid no attention to Alan Greenspan’s warnings, either, on Monday, as they bid technology shares sharply higher and pushed the Nikkei-225 stock index to a new 2 1/2-year high.
Markets also set record highs in Germany, Sweden, Mexico and Brazil, among others.
U.S. markets were closed in observance of Martin Luther King Day, but many foreign markets took their cue from Wall Street’s surge on Friday, which lifted the Dow Jones industrial average 140.55 points to a record 11,722.98.
Investors had poured back into U.S. tech stocks and other issues on Friday, all but ignoring the Federal Reserve chairman’s speech Thursday night warning again of the dangers of an overheated market.
Despite his concerns, many analysts said Friday, Greenspan appeared to be signaling that the Fed plans only modest interest-rate increases ahead.
Better-than-expected earnings reported Friday by Intel, the world’s largest maker of semiconductors, helped buoy investor sentiment. Intel rocketed $12 to $103.06.
“I thought the party was over for a while, but the U.S. market is really amazing,” said Teruhisa Ishikawa, deputy general manager at Izumi Securities’ equity division in Tokyo. “It gives foreign and domestic investors here a lot of confidence.”
The Nikkei index surged 480.68 points, or 2.5%, to 19,437.23 on Monday, its highest close since Aug. 8, 1997.
By midday today profit-taking had set in, pulling the Nikkei down about 212 points to 19,225.
Still, analysts said the breadth of the market’s advance on Monday suggests demand for Japanese stocks continues to build. All but four of the 33 Topix stock sub-indexes rose, while more than 1,000 first-section shares rose and 247 shares fell.
Monday was the first time the number of stocks falling was below 250 since Sept. 30.
“Japan, by default, has been labeled the second-hottest Internet investment opportunity, and it’s starting to get ‘designer’ index valuations,” said Stefan Labrack, senior manager of West LB Securities Pacific’s equity department.
Softbank, one of the world’s largest investors in online businesses, rose its daily limit of 5,000 yen to 95,900, a 5.5% gain.
“The strength in the U.S. and a growing bullishness in Japan make it hard for people to decide when to take profits,” said Yoshio Aoki, a trader at Ark Securities Co.’s equity department.
Real estate, warehouse and paper companies also rose as investors switched some funds into stocks that under-performed the market last year.
In Europe on Monday, Germany’s DAX stock index led major markets higher, rising 1.2% to a record 7,258.90. Telecom stocks were hot once again.
In Latin America, the main Mexican and Brazilian stock indexes jumped 0.9% and 2.2%, respectively, to record highs.
Grupo Mexico, the world’s third-largest copper producer, led the market after its Peruvian unit said it may shave investment costs through modernization.
The Mexican market is up 4.1% year to date, and Brazil’s is up 5.6%. By contrast, the U.S. Standard & Poor’s 500 index is off 0.3% so far this year.
In currency trading, the yen strengthened to 104.9 per dollar in Asia today from 105.70 on Friday in New York on fading expectations that finance ministers of major industrial nations will offer new support to weaken the yen.
Bloomberg News was used in compiling this report.
