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Japan’s Nikkei 225 average surged past the 50,000 level for the first time in its 75-year history, driven by optimism that new pro-stimulus Prime Minister Sanae Takaichi’s policies will boost economic growth and hopes that US-China trade tensions are easing.
The closely watched index jumped 1.6 per cent in the first 90 minutes of trading, rising to 50,100. The yen remained soft against the dollar, hovering around an eight-month low and boosting exporter stocks.
Progress between Washington and Beijing on trade negotiations lifted equities across Asia on Monday morning, said Wee Khoon Chong, a senior strategist at BNY. “Everything is pointing to sentiment getting a little bit better.”
50,100
The Nikkei 225’s record peak on Monday
US officials expect China to delay introducing export controls on rare earths, after two days of talks in Malaysia raised hopes that US President Donald Trump and Chinese leader Xi Jinping would agree to extend a trade truce at their high-stakes summit this week.
The Nikkei rally followed a policy speech on Friday by Takaichi in which she set out plans to stimulate economic growth and accelerate an increase in defence spending.
The announcement came ahead of Trump’s visit to Japan this week and what are expected to be strenuous efforts by Takaichi to bolster the US-Japan alliance and strike up a friendship with the American president.
Market expectations of greater government spending have pushed stocks higher since Takaichi was named leader of the ruling Liberal Democratic party this month.
BNY’s Chong said equities in Japan were likely to continue rallying. “We are probably going to see new highs for many days to come,” he said. “I don’t think this is the end just yet.”
