Japan Shares Jump Second Day After Yen Tumbles on Stimulus Bets

Japanese shares rallied for a second day on strong volume after the yen fell by the most since 2014 as Prime Minister Shinzo Abe pledged to stimulate a struggling economy.

The Topix index rose 2.4 percent to 1,285.73 at the close in Tokyo. The measure jumped 3.8 percent on Monday, the most since February, after Abe’s ruling party and coalition secured a majority in upper-house elections and the premier said he wants “the swift formulation of comprehensive, bold economic measures.” The yen traded at 103.22 per dollar after slumping 2.2 percent on Monday, the most since October 2014. The S&P 500 Index added 0.3 percent to close at an all-time high.

“Japanese shares are rallying higher on stimulus package hopes and hopes that Abe will push through more Abenomics reforms,” said Andrew Sullivan, managing director of sales trading with Haitong International Securities Group Ltd. in Hong Kong. “Abe campaigned on the basis of more reform, so the vote shows he has a mandate for more action. The real question is whether he really will pull the trigger on the issues that are unpopular but need to happen.”

The Nikkei 225 Stock Average climbed 2.5 percent to 16,095.65, bringing its two-day gain to 6.5 percent. Abe indicated he will order ministers to prepare plans for further stimulus Tuesday, with measures to be aimed at supporting domestic demand.

Abenomics’ Market

Abe’s growth strategy of fiscal and monetary stimulus and regulatory reform, as well as the Bank of Japan’s unprecedented monetary easing, had sent the yen plunging and stocks soaring since he took office in 2012. But after the Topix closed at its highest since 2007 in August last year, a clouding outlook for the global economy as well as fading optimism over the effectiveness of Abenomics spurred stock declines. The U.K.’s decision to leave the European Union further added to investors’ woes, with the Topix yet to recoup losses following the shock referendum.

Volume on the Topix was 30 percent above the 30-day intraday average. Financial shares led gains as all but one of the 33 industry groups on the measure rose. Just 28 stocks fell on the Nikkei 225.

  • Exporters were the biggest boosts to the Topix, with Toyota Motor Corp. and Honda Motor Co. adding 2.7 percent each. Mazda Motor Corp. surged 6.5 percent, adding to Monday’s 6.7 percent gain.
  • Nintendo Co. rose 13 percent, taking its advance since July 7 to 59 percent, after its Pokemon Go mobile game became an instant hit.
  • Nexon Co. slumped 5.2 percent. South Korean prosecutors searched houses of the online game developer’s founder, Kim Jung Ju, and a senior prosecutor Yonhap News reported without citing anyone.

U.S. shares gained on Monday after a better-than-forecast jobs report brightened the economic outlook without fueling expectations that the Federal Reserve will raise interest rates sooner. Alcoa Inc. unofficially kicked off the U.S. earnings season after markets closed Monday, reporting profit for the second quarter that topped analysts’ estimates.

“U.S. shares have started the week on a good note, and the risk-on is continuing,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. Abe’s win “means expectations are rising and it’s leading to higher share prices.”

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