Tokyo, Japan (BBN)-Japanese shares jumped more than 2 per cent on Wednesday as the yen weakened against a stronger dollar and recent surveys suggest global manufacturing sectors might be seeing a strong turnaround.
The Nikkei 225 leaped up 2.07 per cent while the Topix bounced up 2.14 per cent, likely due to expectations of a weaker yen after the greenback hit a 14-year high overnight against a basket of currencies, reports CNBC.
The final Nikkei Japan manufacturing Purchasing Managers Index (PMI) rose to 52.4 in December, beating a preliminary reading of 51.9 and November’s 51.3.
A figure above 50 represents expansion in a sector, while a reading below 50 indicates contraction.
The private survey indicates Japan’s manufacturing sector is seeing signs of recovery, with increase domestic and global demand.
It follows an upbeat China’s Caixin manufacturing PMI on Tuesday to its best since January 2013, aiding regional sentiment.
The greenback surged to a 14-year high at 103.82 on Tuesday, supported by a strong read on the ISM manufacturing index, which was up 54.7 in December at its highest level in two years.
“The weak yen and buoyant regional PMIs/ISM were reasons for optimism about Japanese exporters,” Vishnu Varathan, head of economics and strategy of Asia and Oceania Treasury Department at Mizuho Bank, told CNBC.
There are more signs that global manufacturing sectors might be recovering strongly, with surveys showing positive readings not just in the US, China and Japan, but also in the UK.
On Tuesday, the Markit/CIPS UK Manufacturing PMI rose to 56.1, its strongest reading since June 2014, and a jump from 53.6 in November.
Against the greenback, the yen continued to weaken for the fifth straight session, at 117.91, while the Australian dollar was tracking $0.7224.
Major Japanese exporters were all sharply higher, particularly automakers.
Toyota was up 2.81 percent, while Honda surged 4.28 percent.
Airbag maker Takata rallied 17.5 per cent, and up 65 per cent or 400 yen per share since last Wednesday, when news broke that the company could settle US criminal charges by next month related to faulty equipment.
Electronics giant Sharp was up 9.63 per cent to 297 yen per share, after jumping as high as 10.3 per cent at two-year highs, after news that it plans to co-build a 61 billion yuan ($8.8 billion) factory in China with Hon Hai Precision Industry to produce liquid-crystal displays. Shares of Hon Hai were up 0.24 per cent to 84.40 Taiwanese dollars.
Earlier, Toshiba plunged as low as 6.9 per cent to 263.5 yen each share at the open, after Asahi Shimbun reported a Japanese security watchdog suspects the company padded profits by 40 billion yen in the past three years, Reuters reported.
Shares of the Japanese conglomerate recovered from earlier losses to trade up 2.58 per cent at 290.3 yen by 10:15 am HK/SIN.
The stock has fallen nearly 37 per cent or 19.6 yen each since last December 26.
Last week, Toshiba said it may have to book several billion dollars in one-off charges related to a US nuclear power plant construction company acquisition.
Chinese shares were lower on Wednesday, despite the overall cheer in Asian markets.
The Shanghai composite was nearly flat, down 0.03 per cent, while the Shenzhen composite slipped 0.037 per cent.
In Hong Kong, the Hang Seng index was down 0.07 per cent.
Australia’s ASX 200 wavered between negative and positive for most of the morning session, and last traded up 0.06 per cent.
South Korea’s Kospi was nearly flat, up 0.02 per cent, after South Korea’s finance minister said the economy’s recovery momentum will likely slow this year, and its time for fiscal policy to play a more active role to boost growth, Reuters reported.
The country is also in the midst of a months-long political scandal, with President Park Geun-hye refusing to testify on Tuesday in the impeachment trial that is set to determine her future, after denying charges of wrongdoing over the weekend.
On the economic data watch, India’s Nikkei Services PMI for December is due while in Southeast Asia, Indonesia and Thailand will announce respective inflation data for the previous month.
Over in the US, the Dow Jones industrial average closed up 0.6 percent at 19,881.76, the S&P 500 finished up 0.85 percent at 2,257.83 and the Nasdaq composite gained 0.37 percent, to close at 5,429.08.
Crude prices retraced overnight losses, with US crude up 0.59 per cent to $52.64 per barrel in Asian trade, and global benchmark Brent up 0.59 per cent to $55.80.
Oil prices dropped more than 2 per cent on Tuesday in the US as the dollar surged to a 14-year high.
A stronger dollar may weigh on commodities, which are dollar-denominated, making it more expensive in other currencies.