Japanese Stock Prices Higher, Dollar Continues Rebound
TOKYO (AP) _ Stock prices surged today in bullish trading sparked by a calm currency market and rumors that the United States soon would announce a budget deficit- cutting package.
The Tokyo Stock Exchange’s key indicator, the Nikkei stock average of 225 selected issues, gained 509.74 points and closed at 21,546.50. The indicator had fallen 649.70 points on Wednesday.
″The market was encouraged by gains in London and New York last night, and by the fact that the dollar wasn’t going nuts,″ said Ginger Tulley, a broker at Vickers da Costa.
The dollar, extending a rebound begun Wednesday, closed today at 134.80 yen, up 0.45 from Wednesday’s close of 134.35 yen and up 1.15 yen from Tuesday’s close of 133.65 yen, its lowest close since modern exchange rates were set in the late 1940s.
The upturn followed remarks by President Reagan that his administration did not want the currency to weaken further.
″The markets are moving very calmly, especially overseas markets,″ said Chuichi Minami, a foreign exchange dealer at Morgan Stanley. Minami said many traders had hedged their positions while awaiting news on U.S. budget cuts and monthly trade figures.
Ron Napier, an economist at Salomon Brothers Asia Ltd., said investors reacted to a rumor that Reagan will seek cuts in the U.S. budget deficit of $80 billion over two years.
″All last week foreign markets could have used some faster U.S. action. The speculation that the U.S. might be coming to a quick resolution of the (budget) deficit problem has stabilized the market,″ Napier said.
Export-led and financial stocks paced the afternoon rally, with domestic demand stocks posting gains as well.
″Construction and housing (issues) were doing what they should be doing - going up. They really divebombed yesterday and they’re back and running today,″ Ms. Tulley said.
The market index soared 502.29 points in the first hour of trading before falling back. Traders said the rise was encouraged by reports that the U.S. trade deficit for September would be smaller than previously expected. The index ended the morning session up 229.52 points at 21,266.28.
Financial markets have reacted strongly in recent months to U.S. trade figures, which are seen as providing signals for the likely direction of stocks and the U.S. dollar.