Nikkei Rises Sharply on Hopes That Political Fears Will Abate

Japanese shares jumped on Wednesday, with the Nikkei index hitting a one-and-a-half month high, as investors bet that a maneuver by Prime Minister Yoshihide Suga could help restore political stability.

The Nikkei gained 1.29% to 28,451.02 points, the highest closing level since July 14, after it crossed important resistance levels such as the 200-day average of 28,281 points.

The broader Topix index rose 1.03% to a five-month closing high of 1980.79 points.

Local media reported yesterday that Suga plans to dissolve the House of Representatives in mid-September and is considering holding a general election on October 17.

While Suga said he had no intention of doing so, only a few investors took his comment seriously, given the traditional understanding that prime ministers are allowed to lie when it comes to dissolving parliament.

Opinion polls show Suga still remains unpopular but not enough for opposition parties to defeat the ruling coalition, while a drop in local coronavirus infections provides an additional boost.