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Japan's Nikkei index recovers pre-coronavirus level

'PM Suga' speculation and Wall Street bounce push up Tokyo stocks 1% to 23,465

The Nikkei Stock Average regained its pre-pandemic level for the first time on Thursday, September 3, 2020. (Photo by Shihoko Nakaoka) 

TOKYO -- Japan's equity benchmark Nikkei Stock Average gained 1% on Thursday to regain its pre-pandemic level for the first time.

The Nikkei index rose 218 points to close at 23,465, a six-and-a-half month high that puts investors where they were before the coronavirus sent the market tumbling in February.

Shares rose across multiple sectors including retail, electronics, chemicals and transportation equipment. Companies like Fast Retailing and Shin-Etsu Chemical Co. climbed nearly 4%, while Nintendo rose 1.6%.

The Nikkei index, when converted to dollars, also reached its highest point since 1990, when the country's famed bubble economy was deflating.

Japanese Chief Cabinet Secretary Yoshihide Suga officially announced his candidacy to succeed Prime Minister Shinzo Abe on Wednesday.

Suga vowed that if chosen, he would continue to push forward with Abe's signature policy mix. The pledge provided investors with a sense of relief that no significant change would be made to the country's major policies, including the Bank of Japan's massive monetary easing program.

Tokyo's gains also followed a broad rally in New York, with the Dow Jones climbing above 29,000 for the first time since February. The Nasdaq and S&P 500 also hit record highs on expectations for progress in the development of COVID-19 vaccines as well as for an additional fiscal stimulus package.

"In addition to Suga's emergence as a strong candidate, the surge in the U.S. market has supported Tokyo stocks," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

However, Ichikawa warned that while the market had experienced a rise, company earnings were still on unsteady ground. "The tech rally in the U.S. is also overheating and could lead to a market correction, which would also drag the Tokyo market down," he added.

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