Japan's Nikkei rose to near five-week highs on Monday morning, tracking a positive note in Wall Street after the US Federal Reserve Chairman Jerome Powell affirmed the Fed's current rate hike policy.

The Nikkei share average rose 0.9 per cent to 22,797.27 in midmorning trade, after touching 22,813.27, the highest level since July 20. Japanese stocks followed gains in US shares, with all but the mining and airline sectors in positive territory. Exporters such as automakers and tech companies led the gains.

“A strong US economy is good news to Japanese companies as they rely on US demand,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

Speaking at a research symposium in Jackson Hole, Wyoming, Powell said the Fed's gradual interest rate hikes were the best way to protect the economic recovery, maintain strong job growth and keep inflation under control. His comments pushed the S&P 500 and the Nasdaq to record highs on Friday.

Toyota Motor Corp surged 1.8 per cent, Honda Motor Co added 1.4 per cent, Tokyo Electron advanced 1.8 per cent and TDK Corp rose 1.9 per cent.

Also attracting buyers were defence equipment makers as investors speculated that geopolitical tension would rise after US President Donald Trump abruptly cancelled his top diplomat's planned trip to North Korea on Friday.

Ishikawa Seisakusho gained 2.2 per cent, IHI surged 3.3 per cent, Howa Machinery advanced 1.5 per cent and Hosoya Pyro-Engineering Co jumped 6.8 per cent. These stocks tend to rise in short-term trade when investors take the view that international political tensions may escalate.

Trump partly blamed China for the lack of progress with North Korea and suggested that talks with Pyongyang, led so far by Secretary of State Mike Pompeo, could be on hold until after Washington resolved its bitter trade dispute with Beijing.

The broader Topix gained 0.8 per cent to 1,723.19.

Related Topics
comment COMMENT NOW