Nikkei rebounds on Wall Street, weak yen; financials soar

TOKYO: Japan's Nikkei share average rebounded on Thursday morning after Wall Street gained and the dollar rose against the yen on hopes U.S. President Donald Trump's administration may be making progress on a tax plan.

The Nikkei gained 0.3 percent to 20,318.45 in midmorning trade, after falling for two days.

Trump offered to lower corporate income tax rates, cut taxes for small businesses and reduce the top income tax rate for individuals.

Financial shares such as insurers and banks , which invest in high-yielding products like foreign bonds, outperformed after U.S. Treasury yields rose their highest in years overnight.

Investors took heart from a better-than-expected reading on U.S. durable goods orders that suggested inflation may be picking up, boosting expectations for a Federal Reserve interest rate hike in December.

Dai-ichi Life Holdings rose 2.0 percent, T&D Holdings added 2.2 percent, Mitsubishi UFJ Financial Group gained 1.1 percent.

A weaker yen underpinned sentiment, with the dollar trading at 112.82 yen, having risen to as high as 113.26 yen on Wednesday, its strongest level in more than two months.

This rise followed news that new orders for U.S.-made capital goods increased more than expected in August and shipments maintained their upward trend.

"It's a straightforward market today. Investors appreciate the weakening yen which raises expectations for better corporate profits in the second half," said Fujio Ando, a senior analyst at Chibagin Securities.

Exporters were in demand, with Tokyo Electron rising 2.1 percent, NEC Corp advancing 1.5 percent and Isuzu Motors added 1.2 percent.

Analysts said that because the Japanese market is hovering near its highest in more than two years, investors are optimistic but cautious in the face of multiple risks ahead such as tensions between the U.S. and North Korea and Japan's snap election.

Japanese Prime Minister Shinzo Abe appears to be calculating that a snap lower house poll will win his Liberal Democratic Party-led coalition another term even if it reduces its lower house dominance to a simple majority. On Thursday, media polls showed a fledgling conservative party led by popular Tokyo Governor Yuriko Koike is gaining traction in its challenge to Abe's ruling bloc.

"It's too early to say whether it's having an impact on the market, but we can say that uncertainty over the election is growing," said Takuya Takahashi, a strategist at Daiwa Securities. Yamato Holdings gained as much as 4.8 percent after a Nikkei report that the delivery services company likely convinced Amazon to pay at least 40 percent more for shipping services in Japan.