Japan's Nikkei ends at 3-week high as markets await US election outcome

Japan’s Nikkei share average ended at a three-week high on Wednesday (Nov 6), led by chip and defence stocks, while market participants keenly awaited the outcome of the US presidential election.

The Nikkei jumped 2.61 per cent to 39,480.67, its highest closing level since Oct 15. The index also posted its biggest daily gain since Sept 26.

The broader Topix ended 1.94 per cent higher at 2,715.92.

The Nikkei accelerated gains as the dollar strengthened against the yen. The dollar was last up 1.7 per cent at 154.24.

A weaker yen tends to boost Japanese exporters’ overseas earnings when repatriated.

“The market is looking ahead of the election outcome already, with the dollar gaining and Japanese stocks rising,” said Yugo Tsuboi, chief strategist at Daiwa Securities.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Donald Trump defeated Democrat Kamala Harris in the battleground states of North Carolina and Georgia, taking him closer to completing a stunning political comeback four years after he left the White House.

Japanese technology stocks rose, with chip-testing equipment maker Advantest jumping 8 per cent to become the biggest boost to the Nikkei.

Technology start-up investor SoftBank Group rose 5.13 per cent.

Defence stocks also rose, with IHI surging 19.28 per cent as the heavy machinery maker raised its annual net profit forecast for the fiscal year ending March 2025.

Peers Mitsubishi Heavy Industries and Kawasaki Heavy Industries jumped 9.85 per cent and 7.34 per cent, respectively.

“This is a typical Trump trade,” said Takashi Hiroki, chief strategist at Monex, as Trump would ask Japan to rely less on the US for its own defence.

Toyota Motor reversed early losses to end 1.72 per cent higher as the automaker posted its first quarterly profit drop in two years on Wednesday.

Honda Motor tanked 6.46 per cent, as the automaker reported a surprise 15 per cent drop in second-quarter operating profit.

Of the Nikkei’s 225 components, 167 stocks rose and 52 fell, with six ending flat. REUTERS