Tokyo shares jump by break after OPEC deal, yen falls

December 1, 2016
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Tokyo's Nikkei 225 index was on course to close at its highest level this year, jumping 2.26 percent, or 413.90 points, to 18,722.38 by the break/AFP
Tokyo’s Nikkei 225 index was on course to close at its highest level this year, jumping 2.26 percent, or 413.90 points, to 18,722.38 by the break/AFP

TOKYO, Japan, Dec 1 – Tokyo stocks rallied on a weaker yen Thursday morning, while energy giants Inpex and Japan Petroleum  soaring more than 10 percent after OPEC hammered out a last-minute deal to cut oil production and boost prices.

Exporters were the main beneficiaries of a fall in the yen to its weakest level in more than nine months as investors welcomed the agreement at the oil cartel, which sent crude prices surging Wednesday.

Overview
  • The Federal Reserve's Beige Book survey, released Wednesday, said the world's largest economy continues to expand nationwide, while a reading of private-sector employment showed hiring at a much faster pace in November than October.
  • Toyota climbed 2.0 percent to 6,782 yen and Canon rose 1.71 percent to 3,317 yen.

Inpex ploughed 10.69 percent higher to 1,201 yen and Japan Petroleum rocketed 12.97 percent to 2,629 yen after OPEC said its 14 members had agreed on specific targets that will reduce production by 1.2 million barrels a day from next month. Key non-member Russia also committed to a cut.

Tokyo’s Nikkei 225 index was on course to close at its highest level this year, jumping 2.26 percent, or 413.90 points, to 18,722.38 by the break. The Topix index of all first-section issues was up 1.86 percent, or 27.37 points, at 1,496.80.

The dollar rose to 114.82 yen in the morning, a level last seen in mid-February, before coming off slightly to trade at 114.33 yen.

The greenback also won support from growing optimism over the US economy and expectations Donald Trump will fan inflation forcing a rise in interest rates with his big spending and tax cutting plans.

The Federal Reserve’s Beige Book survey, released Wednesday, said the world’s largest economy continues to expand nationwide, while a reading of private-sector employment showed hiring at a much faster pace in November than October.

“What’s key is the rise in expected (US) inflation,” said Norihiro Fujito, a Tokyo-based senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“With higher expectations for inflation, long-term yields (on Treasury bonds) have risen in the US, which in turn has weakened the yen, boosting Japanese stocks,” he told Bloomberg News.

Toyota climbed 2.0 percent to 6,782 yen and Canon rose 1.71 percent to 3,317 yen.

Pharmaceutical giant Takeda was up 0.38 percent at 4,703 yen after media reports said its talks had broken off with Valeant over a possible $10 billion purchase of the Canadian firm’s Salix stomach drugs business.

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