Japanese shares led a broader regional rally as many markets built on Monday’s gains as investor sentiment grew amid European governments’ coordinated efforts to shore up its financial sectors and expectations that the US will use part of its bailout for a recapitalisation programme.
The Nikkei 225 surged more than 13 per cent to 9,377.24, while the broader Topix rallied 13 per cent to 949.20. Stocks gained more than their Asia-Pacific peers, playing catch up after yesterday’s national holiday.
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Japan also announced measures to shore up its stock markets and enhance smooth lending to small- and medium-sized companies. Tokyo said it will relax restrictions on company share buybacks, strengthening the disclosure on short selling will be considered and measures implemented. The government will also discuss and implement a temporary suspension of the sale of public-sector owned shares.
Japanese banking stocks surged. Mitsubishi UFJ Financial jumped 14 per cent to Y810, following its announcement it had won improved terms for its $9bn investment in Morgan Stanley.
Other banks also rallied, with Sumitomo Mitsui Financial gaining 16 per cent to Y642,000 and Nomura Holdings, the country’s largest brokerage, rising 16 per cent to Y1,423.
Japanese wholesale prices also rose at a slower pace in September, Bank of Japan data showed, easing concerns over companies struggling to deal with higher raw material costs they haven’t been able to pass onto the consumer. Prices rose 6.8 per cent from a year earlier, compared with August’s 7.2 per cent rise.
The Hang Seng index was trading 4.4 per cent higher at 17,027.83, while the sub-index of mainland companies listed in the territory was 6.5 per cent higher at 8,609.55.
S&P 500 futures were trading 2.2 per cent higher at 1,039.50 following Wall Street’s more than 11 per cent surge overnight.
In Australia, the S&P/ASX 200 index was 3.2 per cent higher by early afternoon in Sydney at 4,313.6, as investors were cheered for a second day by government measures to shore up its financial sector and its economy.
The Australian government said today it will provide A$10.4bn to stimulate consumer spending and investments.
The decision follows yesterday’s pledge by Canberra and New Zealand to guarantee all bank deposits. The Australian government also said it will guarantee all term wholesale funding by Australian banks in international markets and doubled the amount it had already pledged to purchase residential mortgage-backed securities to A$8bn.
New Zealand shares gained 6 per cent to 2,948.974.
In South Korea, the Kospi was 5.4 per cent higher at 1,357.92 and Singapore’s Straits Times Index had gained 6.2 per cent to 2,204.05.
Overall the FTSE All-World Asia Pacific index was 8.4 per cent higher to 181.32, helping to claw back more of last week’s 17 per cent fall, with the biggest risers being Japanese.
Toyota led the index higher, with a 13 per cent gain to Y3,660, while other exporters such as Canon and Honda also posted large gains. Canon gained 16 per cent to Y3,600, while Honda rose 17 per cent to Y2,475.
The dollar gained to Y102.10, having traded as low as Y99.64 on Monday. The weaker yen gave Japanese exporters an additional lift, making their goods more competitive abroad.
The Korean Won gained against the dollar, recently trading at Won1,208.50.
Japanese bond futures declined as investors bought up equities, with December 10-year JGB futures losing 1.2 to 136.16.
The Sensex opened for trading 4 per cent higher at 11,760.03. Crude oil futures gained 2.5 per cent to $83.18.
