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Nikkei Spikes on Hopes Suga Gambit to Ease Political Worries

TOKYO, Sept 1 (Reuters) - Japanese shares jumped on Wednesday, with the Nikkei hitting a 1-1/2-month high, as investors bet Prime Minister Yoshihide Suga’s manoeuvring might help restore political stability.

The Nikkei average gained 1.29% to 28,451.02, its highest close since July 14, having broken above key resistance levels such as the 200-day average at 28,281.

The broader Topix rose 1.03% to a five-month closing high of 1,980.79.

Domestic media reported on Tuesday that Suga intended to dissolve the lower house of parliament in mid-September and was considering holding the general election on Oct. 17.

While Suga said he had no such plan, few investors took his comments at face value, given traditional understandings that prime ministers are allowed to lie when it comes to dissolving the parliament.

“There is speculation Suga might install someone popular as his secretary general and call a snap election as soon as next week,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Suga is also likely to come up with economic measures, possibly including payments to people hit by the pandemic.”

Polls show Suga remains unpopular but not enough to let opposition parties defeat the ruling coalition, with falling domestic coronavirus cases providing additional boost.

Historically, the market tends to perform well after the parliament is dissolved, making short-sellers nervous about sticking to their positions.

Komatsu jumped 5.4% after Bloomberg reported Cathie Wood’s Ark Autonomous Technology and Robotics ETF has been buying the firm’s American depository receipts almost daily since mid-August.

The construction equipment maker is now the 13th largest holding for the popular fund, its disclosure documents showed.

Toyota Motor rose 0.6% to reclaim levels seen before the carmaker’s shock announcement on Aug. 19 that it would slash production by 40% in September.

(Reporting by Hideyuki Sano; editing by Uttaresh.V and Subhranshu Sahu)

Source: Reuters


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