As cyclicals shine, Japan’s Nikkei ends at a more than 31-year high

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On Tuesday, Japan’s Nikkei closed at a more than 31-year high, boosted by cyclical equities mirroring overnight Wall Street advances, while success in domestic vaccination rollouts raised prospects for an economic resumption. The Nikkei 225 ended up 0.73 percent at 30,670.10, its best level since August 1990. The broader Topix index rose 1.01 percent to 2,118.8.

“The difference between today and yesterday is that today’s gain is led by a rebound of US stocks,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

“When economically sensitive (cyclical) stocks lead the US market, that works favorably to the Japanese market because Japan has no big growth shares equivalent to GAFA (Google, Apple, Facebook, and Amazon), so the market can’t take advantage of their gains.”

Overnight, the S& P 500 snapped a five-day losing streak, powered by value stocks, which stand to benefit the most from a rising economy. The insurance sector led the way among the Tokyo Stock Exchange’s 33 subindexes, rising 3.67 percent, followed by shippers, which rose 2.14 percent. Refiners gained 2.05 percent after oil prices reached a six-week high.

Hopes for an economic reopening have also buoyed sentiment, as Japan is on course to achieve the immunization levels of the United States and Europe. According to the government, more than half of Japan’s population has been fully vaccinated. SoftBank Group and Advantest followed the Nasdaq lower overnight, sliding 0.49 percent and 0.18 percent, respectively. The Nikkei’s biggest performance was Tokio Marine Holdings, up 6.2 percent, followed by Showa Denko, up 6.19 percent, and Z Holdings Corp, up 5.24 percent. Konami Holdings was the worst performer on the Nikkei, down 2.79 percent, followed by Pacific Metals, which fell 2.72 percent, and Tokyo Electric Power Company Holdings, which plummeted 2.27 percent.