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Japan Shares Outperform

Japan Shares OutperformJapan Shares Outperform

Japanese shares outperformed in Asia on Tuesday, with the Nikkei stock average rising to a 7-year high as speculators snapped up futures and call options as they wagered that Prime Minister Shinzo Abe may postpone a planned sales tax increase.

Some of that luster, as well as fresh closing highs on Wall Street overnight for both the S&P 500 and the Dow industrials, was seen rubbing off on European bourses, Reuters said in a report.

“European equities are set to perk up on overnight gains in the US and Asia. Confidence in the US economy seems to be brushing off any domestic concerns and the bulls are running with it,” Capital Spreads dealer Jonathan Sudaria said in a note.

Capital Spreads predicted Britain’s FTSE 100 would edge up 9 points, or 0.1 percent; France’s CAC 40 would open up 13 points, or 0.3 percent, and Germany’s DAX would open 20 points higher, or 0.2 percent.

  Asia-Pacific Shares

MSCI’s broadest index of Asia-Pacific shares outside Japan wavered between positive and negative territory and was last down about 0.2 percent.

Japan’s Nikkei stock average surged more than 2 percent, brushing a 7-year high and extending gains as the yen turned lower in afternoon trade and futures jumped as investors pondered the possibility Abe may postpone a planned sales tax increase and call early elections.

Local media reported on Tuesday that Abe might call a snap vote before the end of the year if he decided to delay a planned hike in the national sales tax to 10 percent from 8 percent that is scheduled to take place in October 2015.

An April hike in the sales tax by three percentage points chilled consumption in the second quarter, driving the Japanese economy into its biggest slump since the global financial crisis.

Sentiment was also boosted by the Bank of Japan’s move on Monday to purchase $331.2 million (38 billion yen) of exchange-traded funds (ETFs), as part of its expanded economic stimulus steps. The news was announced after markets closed on Monday.

Chinese shares turned down 0.7 from a three-year high earlier in the session, a day after they surged 2.5 percent on announcement of a deal that will give global investors easier access to China’s $3.9 trillion stock market.

  Currency

The dollar added about 0.3 percent on the day to 115.18 yen, moving back toward Friday’s seven-year peak of 115.60.

The euro was steady on the day at $1.2424, holding above a two-year trough of $1.2358 touched on Friday, but strategists said the single currency remained vulnerable.

Spot gold was slightly higher at $1,151.25 an ounce after the previous session’s 2 percent slide.

 

Financialtribune.com