Japan’s benchmark Nikkei stock index closed higher Tuesday on hopes that the Bank of Japan (BOJ) will maintain its ultra-easy monetary policy following the release of downbeat wage data, while eased concerns over the U.S. economy added support.
The 225-issue Nikkei Stock Average added 289.35 points, or 0.90 percent, from Monday to close the day at 32,506.78, marking its highest closing level since July 19, 1990.
The broader Topix index, meanwhile, gained 16.49 points, or 0.74 percent, to finish at 2,236.28, to book its highest finish since Aug. 1, 1990.
Dealers said that data released Tuesday showing that along with household spending in Japan dropping 4.4 percent in April from a year earlier, wages were also on a downtrend.
They highlighted data showing wages slumped 3.0 percent in April, extending declines for the 13th consecutive month and noted that wages remain behind price rises for commodities and energy prices, with inflation forcing households to make some significant cuts in spending, like outlays for education.
As a result of the downbeat data, market strategists said the likelihood remained that the Bank of Japan would stay pat on its ultra-easy monetary policy, which bolstered buying confidence, despite the BOJ’s stance being in stark contrast to other major global central banks, which have tightened policies to combat oppressive inflation.
Brokers here also pointed to a growing view the U.S. Federal Reserve may forego a rate hike at the conclusion of its next policy-setting meeting, as some data, such as employment figures, have supported the view the U.S. economy may be improving.
But concerns remained, they said, as recent U.S. economic data has been choppy, with the Institute for Supply Management’s non-manufacturing data for May missing median market expectations, for example.
“A big reason why Japanese stocks are sought by global investors is because the improving situation in the United States has reduced downside risks in the world’s largest economy,” Koichi Fujishiro, a senior economist at Dai-ichi Life Research Institute, was quoted as saying.
Heavily weighted components reversed earlier losses and helped prop up the broader market, with Uniqlo clothing chain operator Fast Retailing gaining 1.7 percent.
Trading company Mitsui & Co. climbed 3.9 percent and was another notable winner, while Seven & i Holdings jumped 2.6 percent, following news it will revamp its delivery service to its stores to make it more efficient and profitable.
Banking shares lost ground, however, on reports regulators in the U.S. may increase capital requirements for lenders, in the wake of a number of U.S. bank failures.
Mizuho Financial Group lost 0.5 percent, while Mitsubishi UFJ Financial Group dropped 0.6 percent. Sumitomo Mitsui Financial Group, meanwhile, ended 0.7 percent lower.
By the close of play, wholesale trade, mining and iron and steel-linked issues comprised those that gained the most.
The turnover on the Prime Market on the second trading day of the week came to 3,450.13 billion yen (24.78 billion U.S. dollars).
