Nikkei rallies 2% on softer yen, Japan leadership contest in spotlight

Ebara

27/09/2024 08:06

(Updates with levels as of 0600 GMT)
    By Brigid Riley
       TOKYO, Sept 27 (Reuters) - Japan's Nikkei share average
rallied more than 2% on Friday, buoyed by further softening of
the yen after a strong advocate of "Abenomics" took the lead in
first-round votes in the ruling Liberal Democratic Party's
leadership election.
    The Nikkei  .N225  ended 2.32% higher at 39,829.56, its
highest close since July 19, while the broader Topix  .TOPX 
finished up 0.73% at 2,740.94.
        The gains extended after right-wing economic security
minister Sanae Takaichi and former defence minister Shigeru
Ishiba qualified for the second round of voting to replace Prime
Minister Fumio Kishida as the leader of Japan's ruling party.
    The market was reacting to Takaichi, an advocate of deceased
former premier Shinzo Abe's "Abenomics" stimulus policies and a
vocal opponent of further interest rate hikes in Japan, coming
in with the most votes in the first round, analysts said.
    "She advocates for monetary easing and fiscal stimulus...
which is a plus for stocks," said Masahiro Ichikawa, chief
market strategist at Sumitomo Mitsui DS Asset Management.
    Under such policies, the yen tends to track weaker and
yields trend in a downward direction, making it easy for share
prices to rise, he said.
    The yen  JPY=EBS  fell to its lowest since early this month
to 146.495, a plus for exporters who benefit from a softer
domestic currency when repatriating funds, as markets braced for
a Takaichi victory.  FRX/ 
    Japanese chip-related stocks led the rally, supported by
overnight gains in their U.S. peers, with Tokyo Electron
 8035.T  climbing 6.66% to deliver the biggest boost to Nikkei.
    Lasertec  6920.T  surged 8.19% and was the biggest
percentage gainer, while Advantest  6857.T  climbed 4.48%.
    Other major shares also made sizable gains, with Nikkei
heavyweight Fast Retailing  9983.T  adding 2.53%, SoftBank Group
 9984.T  rising 2.26% and Daikin Industries  6367.T  ending
6.28% higher.
    In a run-off vote after market hours, Shigeru Ishiba
prevailed over Takaichi, which will likely drag the market down
in the short term, analysts said.

 (Reporting by Brigid Riley; Editing by Eileen Soreng and Sumana
Nandy)
 ((brigid.riley@thomsonreuters.com;))