Nikkei scales over 2-yr high on weak yen, snap election hope

By Ayai Tomisawa

TOKYO, Sept 19 (Reuters) – Japan’s Nikkei share average surged 2 percent on Tuesday to hit its highest close in more than two years as investors drew confidence from a weakening yen and gains on Wall Street, while hopes of a snap election underpinned the market.

The Nikkei jumped 2.0 percent to end at 20,299.38, the highest closing level since August 2015.

The broader Topix gained 1.8 percent to hit a fresh two-year closing high of 1,667.88.

Japanese markets were in part catching up to gains in global equities and yen weakness after a public holiday on Monday.

The dollar was hovering around an eight-week high against the yen on Tuesday, while traders were focused on a two-day Federal Reserve policy meeting which starts later in the day.

Also helping risk appetite were expectations of a snap election.

Prime Minister Shinzo Abe is considering calling a poll for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party, according to government and ruling party sources.

“Investors were worried about ‘Abexit’, but if he calls a snap election and his ruling party wins, it would strengthen the foundations of his once-weak government base,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Abe’s ratings dropped below 30 percent in some surveys in July, battered by suspected cronyism scandals.

However, his popularity rebounded after a cabinet reshuffle in early August and has since been helped by worries over a volatile North Korea.

All of the Topix’s 33 subsectors were in the positive territory, with financial stocks and exporters outperforming as risk appetite recovered.

Mitsubishi UFJ Financial Group soared 4.0 percent, while Sumitomo Mitsui Financial Group climbed 3.1 percent, and Nomura Holdings rose 2.8 percent.

Insurers were in demand as well, with T&D Holdings climbing 3.0 percent and Sompo Holdings jumping 4.7 percent.

Toyota Motor Corp surged 3.8 percent, Nissan Motor Co added 2.1 percent and Panasonic Corp gained 2.5 percent.

Nintendo Co surged 7.1 percent to hit a nine-year high after Credit Suisse raised its rating to “outperform” from “neutral,” citing likely strong Switch sales. (Editing by Amrutha Gayathri)