Japan Nikkei rises to five-week peaks

Japan share market finished session to a five-week peak on Wednesday, 15 July 2020, following Wall Street's positive lead, with an upbeat mood also helped by encouraging results from a coronavirus vaccine clinical study. Meanwhile, momentum was also supported by optimism about swift economic growth supported expectations that corporate earnings will pick up in the second half of the year.

At closing bell, the 225-issue Nikkei Stock Average surged 358.49 points, or 1.59%, to 22,945.50. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 24.36 points, or 1.56%, at 1,589.51.

All 33 issues of industry category of Topix index climbed into black territory, with Mining, Iron & Steel, Machinery, Real Estate, Wholesale Trade, Rubber Products, Transportation Equipment, and Retail Trade issues being notable gainers.

Sentiment for Japanese equities and other risky assets got a boost on more upbeat news regarding a potential coronavirus vaccine. The US biotech firm Moderna said the final stage of human trials for a Covid-19 vaccine would start at the end of the month, after a report said its first stage tests had been a success.

The news follows an announcement from Pfizer and BioNTech that two of four candidates for treatment had received "Fast Track" designation from US officials. Pfizer (PFE) and BioNTech (BNTX) announced that two of the companies' four investigational vaccine candidates received Fast Track designation from the U.S. Food and Drug Administration. The companies said they expect to start the next phase of trials as soon as later this month and are anticipating enrolling up to 30,000 subjects. If the ongoing studies are successful and the vaccine receives regulatory approval, Pfizer and BioNTech expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.

Market sentiment improved further after recent data from many major economies have shown signs that corporate activity and consumer spending are recovering from sharp declines in the first half of the year caused by the coronavirus pandemic.

However, market gains were tethered on China-US geopolitical tensions. U.S. President Donald Trump on Tuesday said he signed legislation to impose sanctions on China in response to its interference with Hong Kong's autonomy. Trump also said he signed an executive order ending Hong Kong's special status with the U.S.

The largest percentage gainers in the index were automaker Nissan Motor Co (up 7.1%), followed by steel manufacturer JFE Holdings Inc (up 5.9%), and plant engineering company JGC Holdings Corp (up 5.5%). The largest percentage losses in the index were pharmaceutical company Eisai Co (down 1.9%), followed by drugs maker Kyowa Kirin Co (down 1.1%, and semiconductor testing equipment maker Advantest Corp (down 1%).

On the economic news front, the Bank of Japan said in its outlook report on Wednesday that the country's economy is likely to improve gradually from the second of this year, though the pace is expected to be only moderate as the impact of the coronavirus pandemic remains globally. For the time being, the Bank will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels, the BoJ said.

CURRENCY: The Japanese yen traded at 107.13 per dollar after touching levels around 107.4 against the greenback yesterday.

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