Nikkei gains, Fed's new strategy boosts financials

  • Reuters
  • Stock Market News
Nikkei gains, Fed's new strategy boosts financials
Credit: © Reuters.

TOKYO, Aug 28 (Reuters) - Japanese shares gained on Friday, as a jump in U.S. long-term bond yields following the Federal Reserve's new long-term policy strategy to allow higher inflation boosted financials and other battered value stocks.

The Nikkei share average .N225 rose 0.36% to 23,290.80 and was on track for a weekly gain of about 1.6%. The broader Topix .TOPX climbed 0.85% to 1,629.66, led by a 1.48% gain in Topix Value .TOPXV . Growth-oriented shares .TOPXG gained just 0.33%.

Life insurers and banks in Japan soared after the Fed put new weight on bolstering the U.S. labour market and promised to aim for 2% inflation on average, suggesting periods of too-low inflation would likely be followed by an effort to lift inflation "moderately above 2% for some time". announcement lifted 10-year U.S. bond yields to a 3-1/2-month high of 0.787% US10YT=RR .

Dai-ichi Life 8750.T jumped 6.4%, while T&D Holdings 8795.T gained 5.9%. Among banks, Mizuho 8411.T added 3.3%, Sumitomo Mitsui Trust 8309.T gained 4.0% and Sumitomo Mitsui Financial 8316.T climbed 3.3%.

"It is becoming clear that the long-term U.S. bond yields have bottomed out. So, investors who haven't prepared their positions for rising yields would want to buy insurers and financials as hedge," said Takenori Yamamoto, a fund manager at Norinchukin Zenkyoren Asset.

Among other value shares, railway operators, hit by social distancing restrictions to contain the COVID-19 pandemic, gained. Central Japan Railway 9022.T rose 4.4% and East Japan Railway 9020.T added 4.4%. Real estate firm Mitsui Fudosan 8801.T rose 4.5%.

On the other hand, investors booked profits from tech shares and other recent strong performers. Chip-making machine maker Tokyo Electron 8035.T dropped 2.8%, while SoftBank Group 9984.T shed 1.9%. Furniture store chain operator Nitori 9843.T lost 1.9%.

Investors are now waiting for Prime Minister Shinzo Abe's news conference at 5:00 p.m. (0800 GMT) in which he is expected to address growing concerns about his health.

Add Chart to Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
Please try another search