March 24, 2020 / 7:13 AM / 3 months ago

Nikkei gains most since 2016 on hopes for BOJ buying; SoftBank Group jumps

SYDNEY, March 24 (Reuters) - Japan's share benchmark Nikkei climbed more than 7% on Tuesday, logging its biggest one-day surge in more than four years, boosted by hopes for massive buying by the Bank of Japan (BOJ) and public pension funds.

The Nikkei average surged 7.1%, its biggest daily gain since February 2016, to finish at 18,092.35, its highest close in 1-1/2 weeks.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, slid 14.3% to 46.69, further off a nine-year peak of 60.86 hit a week ago.

U.S S&P 500 stock futures last traded 3.1% higher and MSCI's broadest index of Asia-Pacific shares outside Japan advanced 4.3% as the Federal Reserve's promise of bottomless dollar funding eased strains in financial markets hammered by the coronavirus pandemic.

In addition to the Fed's unlimited QE, hopes for massive stock buying by the BOJ, public pension funds and buyback by listed companies supported the Tokyo market, analysts said.

Some think the fact that the BOJ has been buying a considerable amount of Exchanged Traded Funds in a more random manner than before makes speculative players hesitant to short Japanese stocks.

"Since the market has largely priced in the GFC (global financial crisis) level conditions, we think there is not much downside left for the Japanese stocks," said Ryota Sakagami, chief equity strategist at J.P.Morgan Securities Japan.

"Having said, we don't expect a sustained uptrend in share prices until the COVID-19 outbreak is confirmed to be contained."

Nikkei heavyweight SoftBank Group Corp jumped 19.0%, extending a run that began a day earlier when the tech conglomerate announced up to $41 billion in asset sales and a record share buyback to shore up its collapsing stock price.

The broader Topix climbed 3.2% to 1,333.10, with all but four of the 33 sector sub-indexes on the Tokyo Stock Exchange in positive territory.

Notable gainers included oil and semiconductor-related companies, with Japan's top oil and gas company Inpex Corp advancing 10.8% and chipmaking equipment supplier Tokyo Electron Ltd soaring 18.0%.

Elsewhere, the index of Mothers start-up shares added 8.1%. (Reporting by Tomo Uetake; Editing by Subhranshu Sahu & Aditya Soni)

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