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Japanese shares jump as recovery hopes lift cheap cyclical stocks

Published 22/02/2021, 03:59
Updated 22/02/2021, 04:00
© Reuters.

© Reuters.

TOKYO, Feb 22 (Reuters) - Japanese shares jumped on Monday,
snapping a three-day losing streak, as optimism on economic
recovery from the pandemic prompted fresh buying in materials,
travel-related and other cheap cyclical stocks.
Japan's Nikkei share average .N225 rose 0.78% to
30,250.83, while the broader Topix .TOPX gained 0.77% to
1,943.72.
Investors scooped up cyclical shares with cheap valuation,
such as Yokohama Rubber 5101.T and Sumitomo Metal 5713.T
that gained 7.2% and 5.3%, respectively.
Travel-related shares also advanced as investors bet on a
continued recovery in the global economy with COVID-19
vaccination programmes gathering pace across the world.
Airliner ANA Holdings 9202.T notched up 5.8%, while rival
Japan Airlines 9201.T added 4.9%. Department store operators
also bounced back, with J.Front Retailing 3086.T up 4.4% and
Takashimaya 8233.T trading 3.1% higher.
Chip-related shares continued to do well, with Tokyo
Electron 8035.T gaining 5.0%.
Rise in U.S. bond yields also lifted Japanese financials,
which are considered to benefit from higher interest income,
with banks .IBNKS.T up 2.2% and insurers .IINSU.T adding
1.7%.
"But one thing that warrants caution is a rise in real U.S.
interest rates. The market is strong today but I believe people
are nervous at the same time," said Hiroshi Watanabe, senior
economist at Sony Financial Holdings.
Such concerns make Federal Reserve Chair Jerome Powell's
Congressional testimony on Tuesday all the more important,
Watanabe added, as U.S. real bond yields have risen almost 30
basis points in just over a week.
The Bank of Japan refrained from buying exchange traded
funds (ETFs) over the past two sessions, when the Topix fell
more than 0.5% in morning trade, a criteria that would have
prompted the central bank's buying in the past.
Yet the market shrugged it off as investors have been
expecting the BOJ to curtail its buying as the market has risen
to a three-decade high.

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