Nikkei hits five-month high on hopes new PM will propel recovery

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TOKYO — Japan’s Nikkei index touched a five-month high on expectations that the country’s new prime minister could spur a recovery with improved measures to tackle the coronavirus crisis and its economic impact.

The Nikkei share average scaled 30,048.23 earlier in the session, hitting the 30,000-level for the first time since April 9. By 0142 GMT, the index was up 0.79% at 29,894.64, while the broader Topix rose 0.89% to 2,059.30.

Japanese stocks have surged since Prime Minister Yoshihide Suga made an abrupt announcement on Friday that he would not seek a re-election at the Liberal Democratic Party’s (LDP) leadership race this month.

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Fumio Kishida, a strong contender to succeed Suga, has called for a stimulus package of more than 30 trillion yen ($273 billion) to cushion the economic blow from the pandemic, a magazine reported.

“Investors had not expected sharp gains in the market before Friday last week. They will continue buying stocks until they finish covering their short positions,” said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

“This momentum will continue as long as we see signs that the ruling coalition will win at the general election. If the vaccination rate will rise and new infections will keep falling, that would also be another tailwind for the market.”

Electronic components maker Murata Manufacturing and robot Keyence jumped 5.14% and 4.52%, respectively, after an announcement that they would be added to the Nikkei 225 in a reshuffle of the benchmark next month.

Nintendo, which will be also included in the benchmark, gained 0.87%.

Meanwhile, Sky Perfect JSAT Holdings, Toyo Seikan Group Holdings and Nisshinbo Holdings will be removed from the benchmark.

Nisshinbo and Toyo Seikan tumbled 11.18% and 15.74%, respectively, while Sky Perfect gained 2.61%. (Reporting by Junko Fujita; editing by Uttaresh.V)