Topix marks all-time-high close and intraday peak
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Nikkei just misses out on fresh record-high close
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Bonds edge higher amid easing of fiscal concerns
By Kevin Buckland
TOKYO, – Japanese stocks rallied to a record peak on Wednesday as markets reacted positively to a Reuters report that the new premier is preparing a sizeable stimulus package that includes measures to help households tackle inflation.
The Topix ended the day up 0.5% at a record-high closing level of 3,266.43, and earlier marked an all-time intraday high of 3.274.94.
The Nikkei finished down very slightly for the day at 49,307.79, missing out on extending Tuesday’s record closing high in the final moments of trading. The index recovered from losses as steep as 1.4% earlier in the session to be up as much as 0.3% after the Reuters report.
Fiscal and monetary policy dove Sanae Takaichi, who was confirmed as prime minister by parliament on Tuesday, is preparing an economic stimulus package expected to exceed last year’s 13.9 trillion yen , government sources told Reuters on Wednesday.
The exact scale of the package is yet to be finalised, the sources added. It could be announced as early as next month.
Investors began the day by selling stocks to lock in profits following a 3.6% rally in the Nikkei over the previous two sessions, which culminated in an all-time intraday high of 49,945.95 on Tuesday.
The gains came as Takaichi secured the crucial backing of the Japan Innovation Party, also known as Ishin, that she needed to secure victory in the parliamentary vote on Tuesday.
Global money managers have been circling back to Japan’s stock and debt markets, drawn by hopes of reflationist government policies under Takaichi, as well as a desire to diversify from pricier U.S. and European markets.
Takaichi’s appointment as prime minister “symbolizes structural reform,” Morgan Stanley MUFG Securities analysts wrote in a client note.
“If the government executes its growth strategy and promotes corporate governance reform, … the projected P/E for the Nikkei and TOPIX would increase by about 2x.”
Meanwhile, bond investors who had fretted about potential fiscal profligacy under a Takaichi government have been soothed somewhat by her stated “responsible proactive fiscal policy”, which keeps a focus on debt sustainability.
Japanese government bonds edged higher on Wednesday, pushing yields slightly lower.
The 10-year Japanese government bond yield eased half a basis point to 1.65%, sticking within this week’s tight range.
The 30-year yield, which had climbed to an unprecedented 3.345% earlier this month when fiscal worries were at their peak, declined 1 bp to 3.115%. The 20-year yield edged down 0.5 bp to 2.63%.
The two- and five-year yields each fell 1 bp to 0.925% and 1.215%, respectively.
