Tokyo stocks open higher on tax hike delay hope

TOKYO — Tokyo stocks opened higher on Monday (May 30), extending three straight sessions of gains as hopes the government would delay a consumption tax hike lifted sentiment.

In opening deals, the benchmark Nikkei 225 index at the Tokyo Stock Exchange added 0.82 per cent, or 138.88 points, to 16,973.72, while the broader Topix index of all first-section shares gained 0.71 per cent, or 9.55 points, to 1,359.48.

Sentiment was boosted by Japanese press reports saying that Prime Minister Shinzo Abe had decided to delay a planned sales tax hike over concerns it could damage the already fragile economy.

Tokyo was scheduled to raise the sales tax from eight per cent to 10 per cent in April 2017.

But Abe told his close aides on Saturday, including Finance Minister Taro Aso, that he intends to push back the planned increase to October 2019, according to Japanese media.

Abe is expected to announce the decision later this week, the reports said.

The increases also follow a positive lead from US equity markets at the end of last week, with the three main indexes on Wall Street rising following Federal Reserve boss Janet Yellen’s much-anticipated remarks Friday at Harvard University.

At the event, Yellen implied that United States’ interest rates could be lifted soon, saying that a rate hike “probably” would be justified “in the coming months” if economic data continued to strengthen.

“The stock market’s reaction is changing and coming around to the idea that the US economy is strong enough to withstand higher rates,” Yoshinori Ogawa, a market strategist at Okasan Securities, told Bloomberg News.

“The expectations for an increase are leading to a stronger dollar and firmer stocks globally, and that’s a stabilising factor for Japanese shares.”

On Wall Street, the Dow closed 0.3 per cent higher, the S&P 500 was up 0.4 per cent and the tech-rich Nasdaq advanced 0.7 per cent.

On currency markets, the dollar rose to 110.78 yen from 110.37 yen on Friday in New York. AFP