TOKYO (Kyodo) — Tokyo stocks recovered Thursday, with the benchmark Nikkei index jumping over 530 points, or 2.3 percent, as investor concerns eased over a further escalation of tensions between the United States and Iran.
The 225-issue Nikkei Stock Average ended up 535.11 points, or 2.31 percent, from Wednesday at 23,739.87, its highest close since Dec. 27. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 27.65 points, or 1.63 percent, higher at 1,729.05.
Easing concerns about the situation in the Middle East prompted investors to unload safe-haven assets including the yen, which had appreciated to a three-month high against the U.S. dollar following Iran’s attacks on bases hosting U.S. troops in Iraq on Wednesday.
The dollar gained nearly 1 yen from the lower-108 yen level in late Tokyo trading Wednesday.
At the Tokyo Commodity Exchange, Middle East crude oil futures saw a flood of sell orders that pushed down the benchmark price to the lowest level in about half a month, alleviating fears that higher energy costs could hurt the global economy.
Gold futures also retreated after hitting a record high the previous day.
Tokyo stocks tracked New York and broader Asian markets in a relief rally after investors gauged the consequences of Wednesday’s Iranian missile strikes against American forces in Iraq in retaliation for the U.S. killing of a top Iranian general in an airstrike last week.
U.S. President Donald Trump on Wednesday offered a restrained response to the Iranian attack, saying his country will impose tougher economic sanctions on Tehran but does not intend to use military power. Iran had said earlier that day it does not seek an escalation of the situation or war.
“Market players were reassured as Iran’s action didn’t escalate toward a broader conflict, and the worst scenario was avoided,” said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.
Brokers said investors are now shifting their focus to the upcoming earnings reporting season in Japan and an interim U.S.-China trade deal set to be signed next Wednesday at the White House.
“Many market players see a low likelihood of near-term declines in shares” as they have priced in negative impacts from U.S.-China trade conflicts on the results of corporate earnings through December, said Shingo Ide, chief equity strategist at the NLI Research Institute.
“Their focus is on earnings projections for the next fiscal year (starting in April) and the biggest theme is how much they can recover,” Ide added.
Amid eased risk aversion, the yield on the benchmark 10-year Japanese government bond rose 0.010 percentage point from Wednesday’s close to minus 0.005 percent. Bond yields move inversely to prices.
Meanwhile, the U.S. dollar fetched 109.34-36 yen at 5 p.m., compared with 109.08-18 yen in New York and 108.41-42 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.1115-1116 and 121.53-57 yen against $1.1098-1108 and 121.17-27 yen in New York, and $1.1151-1152 and 120.89-93 yen in Tokyo late Wednesday afternoon.
The weaker yen helped boost export-related shares, while marine transportation and precision instrument issues were also among gainers.
Screen Holdings, a chip-making machine manufacturer, jumped 440 yen, or 6.1 percent, to 7,650 yen, electronics firm Fujitsu climbed 420 yen, or 4.0 percent, to 11,035 yen and automaker Mazda was up 22 yen, or 2.4 percent, to 949 yen.
Declines in fuel prices supported marine transporters after their recent falls, with Mitsui O.S.K. Lines jumping 80 yen, or 2.9 percent, to 2,871 yen and Kawasaki Kisen up 30 yen, or 1.8 percent, at 1,695 yen.
Oil refiners and explorers, however, bucked the trend. Inpex tumbled 32 yen, or 2.7 percent, to 1,155 yen and JXTG Holdings lost 13.90 yen, or 2.7 percent, to 503.90 yen.
On the TSE’s First Section, advancing issues outnumbered decliners 1,960 to 157, while 43 ended unchanged.
Trading volume on the main section fell to 1,146.56 million shares from 1,453.11 million shares on Wednesday.
