June 3, 2020 / 6:29 AM / a month ago

Nikkei rallies to over 3-month high; weaker yen lifts auto shares

SYDNEY, June 3 (Reuters) - Japan’s stock benchmark Nikkei advanced to a more than three-month high on Wednesday, as a rapidly weakening yen and a so-called fear of missing out, or “FOMO”, from investors boosted automakers and other cyclical sectors.

The Nikkei average gained 1.3% to 22,613.76, its highest closing level since Feb. 21.

The yen rapidly weakened overnight against both the U.S. dollar and the euro, on optimism the worst of the economic downturn from the COVID-19 crisis is over as well as on hopes of additional support from the European policymakers.

The dollar/yen hit a two-month high of 108.850 yen, while the euro/yen touched a 4-1/2-month high of 121.805 yen early Wednesday.

As a soft yen boosts Japanese manufacturers’ profits made abroad when repatriated, automaker stocks attracted buying.

Mazda Motor soared 9.1%, while Nissan Motor and Subaru jumped 7.5% and 6%, respectively.

The broader Topix rose 0.7% to 1,599.08, its highest closing since Feb. 26, with all but five of the 33 sector sub-indexes on the Tokyo exchange ending firmer.

Highly cyclical non-ferrous metals, transport equipment and rubber products were the three top-performing sectors on the main bourse.

Bucking the overall market sentiment, the index of Mothers start-up shares retreated 1.2%, after marking a fresh 1-1/2-year high earlier in the session.

Analysts said the market has been surprisingly resilient to negative news, both domestic and international, but a sense of short-term overheating capped gains.

Japan issued a stay-home alert late Tuesday as the country’s capital recorded 34 new coronavirus cases, the highest since early May.

Meanwhile, U.S. President Donald Trump has threatened to use the military to quell spreading protests against racism and police brutality, but Wall Street stocks rallied on Tuesday, reflecting the global investor optimism. (Reporting by Tomo Uetake; Editing by Arun Koyyur and Sherry Jacob-Phillips)

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