Nikkei scales 6-week high on hopes for virus treatment, US plan to reopen

SYDNEY: Japan's share benchmark Nikkei hit its highest closing level in nearly six weeks on Friday, tracking gains in US futures, supported by reports of a potential coronavirus treatment and President Donald Trump's guidelines for re-opening the economy.

The Nikkei average advanced 3.2 per cent on short-covering to finish at 19,897.26, its highest closing since March 9. For the week, the index eked out a 2.0 per cent gain.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, dropped to as low as 35.31, its six-week low, reflecting the modest risk-on mood in the market.


US stock futures jumped in the Asian trade after reports of promising early data related to a potential COVID-19 treatment from Gilead Sciences Inc and Trump unveiled guidelines for re-opening the economy, with S&P 500 e-minis last trading up 3.4 per cent.

Traders said today's bounce was primarily led by short covering by commodity trading advisors (CTAs) and other funds, and not by fresh buying and thus, is unlikely to be sustainable.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's largest contract chipmaker whose clients include iPhone maker Apple Inc, reported a near doubling in first-quarter net profit.

Taking a positive cue from this, Tokyo-listed semiconductor-related stocks were in demand, with chipmaking gear manufacturer Tokyo Electron Ltd rising 3.9 per cent and test device maker Advantest Corp soaring 6.5 per cent.

The broader Topix advanced 1.4 per cent to 1,442.54, with all but six of the 33 sector sub-indexes on the Tokyo exchange finishing higher.

Highly cyclical sea transport, transport equipment and non-ferrous metals were the top three performing indexes on the main bourse.

Nippon Steel Corp climbed 4.4 per cent and JFE Steel's parent JFE Holdings Inc jumped 4.7 per cent.

Honda Motor Co Ltd surged 8.3 per cent, while Nissan Motor Co Ltd and Mazda Motor Corp added 3.0 per cent and 4.6 per cent, respectively.

The market largely shrugged off a larger-than-expected fall of 6.8 per cent year-on-year in China's gross domestic product (GDP) data for the January-March quarter.