Nikkei rallies as investors gain confidence after Fed rate hike

Reuters Tokyo | Updated on January 22, 2018 Published on December 17, 2015

Japanese stocks rallied on Thursday morning after the US Federal Reserve announced a gradual tightening cycle with its first rate hike in nearly a decade, boosting the sentiment and risk appetite enough for investors to shrug off worse-than-expected Japan export data for November.

The 3.3 per cent fall in exports from a year earlier compared with a 1.5 per cent decrease expected by economists in a Reuters poll, but the impact was softened as investors took the US rate hike as a mark of confidence in the world’s largest economy.

The Nikkei share average had gained 2.3 per cent to 19,483.38 in midmorning trade.

“The markets are really hanging onto Janet Yellen's comments about a strengthening economy, particularly in big export countries like Japan, which relies on US consumers to buy its goods,’’ said Gavin Parry, managing director of Parry International Trading.

“Recently things have been hanging on liquidity expansion, which has nothing to do with the economy, so the fact that she’s talking up the economy now is in a sense a return to normality.’’

The yen resumed its weakening against the dollar following the Fed decision, which further fuelled the morning’s upbeat sentiment and helped to boost the shares of major exporters. Panasonic Corp gained 1.5 per cent, while Bridgestone Corp climbed 3.3 per cent and Toyota Motor Corp rose 2.1 per cent.

Sumitomo Metal Mining Co shares jumped 5.9 per cent to a two-week high after Credit Suisse raised its rating to “outperform’’ from “neutral’’, while Seibu Holdings climbed 4.8 per cent after SMBC Nikko Securities raised its rating to “outperform’’ from “neutral’’.

The Topix subindex for insurance shares rose 4 per cent, while real estate shares were up 3 per cent.

The broader Topix gained 2.3 per cent to 1,576.06 with all of its 33 subindexes in positive territory.

The JPX-Nikkei Index 400 rose 2.3 per cent to 14,199.21.

Published on December 17, 2015
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