Japanese shares rebound boosts markets
Tuesday 14 January 1997
A switchback session for Tokyo saw shares slip close to the psychologically important 17,000 level in early trading only to reverse that with a storming 1,100 point rise at one stage on short covering.
The Nikkei index eventually closed 815.14 points ahead, or 4.71 per cent, to 18,118.79, offsetting part of the 2,142.35 point fall over the previous four trading days.
Japanese investors, suffering from historically low interest rates, have fled to other markets for better returns on their money. On Friday alone, the index slid 770 points, the biggest drop since January 1995.
Keiko Kondo, a strategist at Merrill Lynch Japan, attributed the rebound to bottom-fishing. "Since last week's fall was so sharp, the index [at current levels] looked attractive and bargain-hunters emerged." But he cautioned that the market could again be hit by companies taking profits on shareholdings ahead of corporate book closings at the end of March.
Analysts called the rebound technical, however, and said it did not signal any major reversal of the bearish trend, adding that the market was still gripped by worries about the economy and the health of some financial institutions.
This analysis was at odds with the futures market, where March contracts briefly surged nearly 1,000 points before closing at 18,130, up 980 points.
Rumours that the government was preparing to step in to support share prices were quashed, but there was evidence of damage limitation. Shoichiro Toyoda, chairman of the powerful business lobby Keidanren, said: "Although there is not much confidence in the economy, I don't think the conditions at the moment are bad."
Asked about recent weakness in the stock market, Mr Toyoda said he was worried about the price falls, but added that movements in stock prices did not necessarily coincide with those in corporate earnings.
Meanwhile, the Prime Minister, Ryutaro Hashimoto, was reported as saying that Japan's economic policy should not be formed only by looking at current stock prices, while other government sources said they did not expect the economy to be hurt by the stock market's weakness.
The Tokyo bounce, coming on the back of Friday's rally on Wall Street, saw several European stock markets close at record highs yesterday. In London, the FTSE 100 index broke through the 4,100 level, ending 50.7 points ahead at 4,107.3, just short of the all-time high of 4,118.5 struck on New Year's Eve.
Wall Street rose further in morning trade, but the Dow was up only around 10 points as European markets closed. It ended on a new high, up 5.39 points at 6709.2.
Market Report, page 17
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
Company reveals $542m investment in start-up building 'a rocket ship for the mind'
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 The inventor of the Facebook 'like' button says he never made a 'dislike' button because he feared the 'unfortunate consequences'
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
Lord Freud hangs on as MPs of all parties 'call for his head' over disability comments
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...