Tokyo stocks climbed 2.61 per cent by the break on Friday, the first day of next year trading, as the yen tumbled on relief over a US deal to avert the “fiscal cliff” of tax hikes and huge spending cuts.
The Nikkei 225 index on the Tokyo Stock Exchange, which ended this year at the highest level since the March last year quake and tsunami disaster, added 270.92 points to 10,666.10 in morning trade after initially rallying more than three per cent.
The Topix index of all first-section issues gained 2.82 per cent or 24.28 points to 884.08.
“Japan’s markets are opening relatively late after the US government acted, and thus they stand to benefit from the news as well as the enthusiastic response from other bourses,” said SMBC Nikko Securities general manager of equities Hiroichi Nishi.
Global markets rallied after the US House of Representatives late Tuesday passed a deal between the White House and Republicans to raise taxes on the rich and put off automatic US$109 billion budget cuts for two months.
The deal lifted the clouds of immediate crisis, sending the yen to its lowest level since July 2010 against the dollar.
The dollar rose to 87.63 yen by Tokyo midday, up from 87.19 yen in New York Thursday afternoon. The euro was at 114.21 yen and $1.3026 from 113.80 yen and US$1.3052.
The market is watching the next moves by Congress and US President Barack Obama.
CLSA equity strategist Nicholas Smith said: “Thereafter [the] focus will be on who Prime Minister [Shinzo] Abe wants to recommend as the new Bank of Japan governor.”
Abe, who took office in December, has pressured the central bank to take aggressive easing steps to help drag Japan out of years of deflation and weak growth.
It has spawned speculation that he will want someone willing to agree to his inflation target to replace current governor Masaaki Shirakawa, whose five-year tenure ends on April 8.
Friday was also the first trading day for Japan Exchange Group, which put together The Tokyo Stock Exchange and Osaka Securities Exchange.
“We will aim for Asia’s No. 1 exchange that is selected by investors from around the world,” the group’s chief executive Atsushi Saito said at in a ceremony at the Tokyo bourse.
Exporters were higher, with Toyota Motor up 4.74 per cent to 4,195 yen and Nikon up 4.82 per cent to 2,648 yen.
Among financials Nomura Holdings climbed 3.97 per cent to 523 yen and Sumitomo Mitsui Financial Group rose 2.72 per cent to 3,200 yen.
Embattled electronics firm Sharp fell 2.64 per cent to 295 yen after a report during the New-Year break that it is considering making a public share offering worth more than 100 billion yen this year.