Nikkei up 5.3% quote.yahoo.com^N225&d=1d
Monday September 7, 4:28 am Eastern Time
Stocks and yen soar on remarks by US and Japan
By Andrew Morse
TOKYO, Sept 7 (Reuters) - Tokyo shares and the Japanese yen surged on Monday on weekend remarks by top U.S. and Japanese officials and technical short-covering, traders said.
The benchmark Nikkei average posted its second-largest point rise of the year, jumping 747.15 points or 5.32 percent to 14,790.06.
The dollar was down as much as two Japanese yen after ''jawboning'' by Japanese officials and the possibility of lower U.S. interest rates.
The rallies followed rumblings from Japanese government sources who said Finance Minister Kiichi Miyazawa told U.S. Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan on Friday that the Nikkei was nearing a turning point where it would shoot higher.
But traders said the market's movement was dictated more by chart points and the SQ -- the expiry of index options and futures -- than by economic fundamentals.
''The market's focus has shifted from fundamental concerns to technical issues,'' said Paul Migliorato, senior salesman at Jardine Fleming Securities.
With option and index futures expiring on Friday, other investors also jumped in to cover their short positions and close them out.
Analysts said massive deployment of public pension fund money helped encourage investors back to the market.
''What we saw was a re-emergence of the 'buy Japan' scenario,'' said Martin Foster, a senior analyst at Standard & Poor's MMS. ''When you got the public fund buying in the morning it just put the seal of approval on it.''
Banks helped lead the rise amid hopes politicians would reach a compromise on bills to help the sector.
The stock market was also helped by a sharp rise in the yen which came after the weekend Miyazawa-Rubin meeting and comments by Greenspan.
Greenspan said in a speech late on Friday that the Fed now saw a balance of risks facing the U.S. economy between deflationary pressures from international crises, and domestic inflation. ''It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress,'' Greenspan said.
Traders said the comments could mean that the Fed is considering lower interest rates. Previously, Fed watchers had thought that with a strong U.S. economy, the only direction for rates was up.
The selling, including active unwinding of yen short positions by U.S. hedge funds, pushed the dollar down as low as 131.60 yen in Tokyo on Monday, compared with 133.55 yen in New York late on Friday.
''We may see more dollar selling against the yen by operators trying to cover losses incurred in emerging markets,'' said Yasuji Yamanaka, chief manager of the foreign exchange division at Nikko Trust and Banking Corp.
The dollar's slide could also gain speed if more Japanese investors sell dollars for hedging purposes, dealers said.
Eisuke Sakakibara, Japan's vice finance minister for international affairs, told reporters on Monday: ''I am very concerned that among Japanese investors, there are some people who do not fully recognise the risk of a yen rise.''
''It may now be a good idea to take Mr Sakakibara's advice more seriously,'' said a dealer at a Japanese bank.
Related News Categories: currency, US Market News
|
