Nikkei rebounds as US debt ceiling deal helps risk appetites recover

Small-to-mid cap stocks largely lagged broader gains, with the Mothers market of start-up shares down 1.5 per cent, moving back toward more than four-month lows plumbed on Wednesday. NSEBSEHitachiLoading data…

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      ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIES TOKYO: Japan’s Nikkei share average rose on Thursday, pulling away from the previous session’s four-month intraday lows after news of an agreement in Washington to raise the US debt limit helped restore investors’ risk appetites.

      The Nikkei ended 0.2 per cent higher at 19,396.52.

      Major US stock indexes finished higher overnight after President Donald Trump forged a surprising deal with Democrats in Congress on Wednesday to extend the US debt ceiling and provide government funding until Dec. 15.

      Investors also pondered news that US Federal Reserve Vice Chair Stanley Fischer will step down in mid-October, potentially accelerating Trump’s opportunity to reshape the direction of the central bank.

      Trump also said on Wednesday that he would get into «great detail» over the next two weeks on his US tax reform plan, which has been short on specifics.

      He also warned on Wednesday that the United States would no longer tolerate North Korea’s actions after its sixth nuclear test, but said the use of military force against Pyongyang would not be his «first choice.»

      Gavin Parry, managing director of Parry International Trading in Hong Kong, said «North Korean fears have calmed, and you have some glimmers visible at the end of the tunnel, with Trump talking about tax reform.»

      «Talk of tax reform tends to bring a little bit of ‘animal spirit’ back to markets,» he said. «This carries over to Japan, where the Bank of Japan’s monetary policy is expected to remain easy, with no tapering on the horizon there.»

      Data released earlier on Wednesday showed that foreign investors remained net sellers of Japanese stocks for the week ending on Sept. 2.

      Investors remained wary of Hurricane Irma, which could strike Florida over the weekend.

      Japanese automakers attracted buying on Thursday, with Toyota Motor Corp rising 1.1 per cent and Honda Motor Co surging 1.4 per cent.

      McDonald’s Holdings Company Japan rose 1.6 per cent, after the fast food restaurant operator said its August same-store sales climbed 14.5 per cent from a year earlier.

      Construction-related shares gained, with Komatsu Ltd surging 3.0 per cent and Hitachi Construction Machinery Co rising 1.9 per cent.

      But small-to-mid cap stocks largely lagged broader gains, with the Mothers market of start-up shares down 1.5 per cent, moving back toward more than four-month lows plumbed on Wednesday.

      The broader Topix gained 0.4 per cent at 1,598.24 and the JPX-Nikkei Index 400 added 0.3 per cent to 14,161.14.

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