Tokyo stocks sharply up after Trump agrees to transition aid

·3-min read
Trump has yet to concede defeat in the election but has agreed to the release of resources to start a transition

Tokyo shares opened sharply higher on Tuesday after US President Donald Trump said he no longer opposed government aid for Joe Biden's transition team, with markets also buoyed by new vaccine news.

The Nikkei 225 index was up 2.62 percent or 667.77 points to 26,195.14 in early trade, playing catch-up after a long weekend with surges in other markets. The broader Topix index added 2.42 percent or 41.85 points to 1,769.24.

Tokyo markets were closed Monday for a national holiday, so the Tuesday rise was partly expected after Monday's positive vaccine news and rises on other bourses worldwide.

But Australia's ASX 200 index was also up one percent shortly after the open.

"The power vacuum in Washington looks to be sucking less life out of the markets after the General Service Administration (GSA) gave the nod to Biden as the apparent winner of the US election," said Stephen Innes, chief global markets strategist at Axi, in a note.

Shortly before the opening bell in Tokyo, Trump tweeted that the GSA should start releasing federal funds and resources to start a transition, ending major uncertainty, although Trump has yet to concede defeat in the election.

"Nevertheless, in the best interest of our Country, I am recommending that (GSA administrator) Emily (Murphy) and her team do what needs to be done with regard to initial protocols, and have told my team to do the same," Trump tweeted.

The Tokyo market was already gearing up for a strong open as it returned to action after a three-day weekend, during which international markets surged on positive news about vaccines.

International investors have cheered news that British drugs group AstraZeneca and the University of Oxford will seek regulatory approval for their coronavirus vaccine, following similar announcements by Pfizer/BioNTech and Moderna.

Oil prices edged up in Asian morning trade, building on healthy gains the previous day sparked by the positive vaccine news.

US benchmark West Texas Intermediate was up 0.26 percent at $43.17 a barrel while the other benchmark, Brent Crude, rose 0.11 percent to $46.11 a barrel.

Tokyo players also welcomed the rebound of the dollar, which stood at 104.62 yen against 104.54 yen in New York on Monday.

"The Tokyo market was likely to see a technical rebound as investors were expected to cheer gains on US shares as well as the depreciation of the yen (to the dollar) around the 104-level," Okasan Online Securities said in a note to clients.

Overnight, the Dow Jones Industrial Average gained 1.1 percent to 29,591.27.

The broad-based S&P 500 advanced 0.6 percent to 3,577.59, while the tech-rich Nasdaq Composite Index added 0.2 percent to 11,880.63.

Players in Tokyo will be eyeing a two-day visit to Japan by Chinese foreign minister Wang Yi, as the two Asian giants conduct delicate diplomatic exchanges.

Japan and China recently signed a major Asia-wide free trade agreement called RCEP, boosting China's economic influence. But their relations are heavily influenced by tensions between China and the US.

In Tokyo trading, exporters benefited as the yen headed lower, including the auto sector.

Toyota rose 1.92 percent to 7,493 yen, Nissan added 2.61 percent to 498.5 yen and Honda rose 3.02 percent to 3,067 yen.

Sony added 2.04 percent to 9,423 yen while Panasonic added 2.40 percent to 1,109.5 yen.

Construction equipment maker Komatsu, which benefit heavily from Chinese demand, added 2.62 percent to 2,584.5 yen.

SoftBank Group rose 1.48 percent to 6,849 yen.

Japan Airlines surged 2.56 percent to 1,965 yen, while rival ANA Holdings fell 3.93 percent to 2,432.5 yen.

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