Japan’s Nikkei 225 jumped on Monday (August 23) after hitting its lowest since December in the previous session. The jump came following August manufacturing data showing manufacturing activity across Japan continued to expand through August, the seventh straight month of growth, amid ongoing COVID-19 restrictions.
August’s manufacturing PMI score of 52.4 is down from 53.0 a month earlier, although it remains above the boom-or-bust line of 50 that separates expansion from contraction, the latest survey from Jibun Bank showed.
Auto-related stocks rebounded from losses following Toyota Motor’s announcement of slashing global production by 40% for September due to the global microchip shortage.
Toyota, the world’s largest automaker by sales volumes, rebounded 3.4%, while Denso jumped 6.6%, Nissan Motor advanced 3.4%, as investors thought impact of Toyota’s output cut would be short-lived.
“The rally today seems to be driven mostly by short-covering after big plunges,” Masato Kogure, group leader of execution at Tokai Tokyo Securities told Reuters.
Traders also seemed to indulge in bargain hunting after last week’s sell-off and shrugged off a defeat of
Hachiro Okonogi, Prime Minister Yoshihide Suga’s close ally in a mayoral election in Yokohama, Suga’s home turf.
In a major personal and political blow to Suga, who represents a district in Yokohama in the Lower House, opposition party-backed Takeharu Yamanaka, 48, won the race to become Yokohama mayor, defeating seven other candidates.
The Suga cabinet’s approval rating continues to slump ahead of a ruling party leadership election expected next month and a general election likely in October. Some investors worry about political instability while othres think the market could benefit if a new leader is elected.
On Monday, Asian shares rose as well as investor sentiment got a big boost from last week’s rally on Wall Street.
However, Asian markets are underperforming the rest of the world in the third quarter, as overseas investors avoid the region amid fresh lockdowns.