Japan Stocks climb to 29-year high on GDP data

Japan shares finished session sharply higher on Monday, 16 November 2020, with the Nikkei nearing the 26,000 mark to end at a new 29-year high, after the economy posted its first expansion in four quarters in the July-September period. Meanwhile, progress in developing a COVID-19 vaccine also boosted investor sentiments.

At closing bell, the 225-issue Nikkei Stock Average advanced 521.06 points, or 2.05%, to 25,906.93, logging the highest finish since June 3, 1991. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 28.59 points, or 1.68%, to 1,731.81.

Japan's economy grew at an annualized 21.4% clip in the July-September period, Cabinet Office data showed on Monday, and followed a 28.8% plunge between April-June, as improved exports and consumption showed the country is recovering from damage caused by the coronavirus pandemic. It was the first gain in consumption in four quarters, and marked the fastest jump since comparable data began in 1980, led by dining out, leisure activities and automobile demand, a Cabinet Office official said.

 

External demand - or exports minus imports - added 2.9 percentage points to GDP growth thanks to a rebound in overseas demand that pushed up exports by 7%. But capital expenditure fell 3.4%, shrinking for a second straight quarter, suggesting that uncertainty over the pandemic's fallout was weighing on business sentiment. Japan has so far announced two stimulus packages worth a combined $2.2 trillion to ease the pain from the health crisis, including cash payments to households and small business loans. Prime Minister Yoshihide Suga has instructed his cabinet to come up with another package as the pandemic's damage persists.

Vaccine optimism outshone worries about rising coronavirus cases globally, with news from Johnson & Johnson giving markets a further boost. The U.S. drugmaker launched a late-stage trial of its vaccine in Britain on Monday, shortly after promising developments from Pfizer and Moderna Inc about work on their respective drug studies.

Japan's exporters made major gains on the back of the trade deal news. Autos in Japan mainly benefited, with Nissan soaring more than 5%, and Mazda rocketing by 6.82%. Mitsubishi jumped 2.54%, and Honda gained almost 5%.

Tech stocks in the country also gained. Tokyo Electron and Panasonic jumped nearly 5%. Softbank Group was up 1.83%.

CURRENCY NEWS: The Japanese yen traded at 104.46 per dollar, after strengthening from levels above 105 late last week.

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