Tokyo shares hit 3-month high on speculative short-covering

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SYDNEY, May 27 (Reuters) – Japan’s stock benchmark Nikkei rose to a three-month high on Wednesday, with financial stocks leading gains, as speculative short-covering during afternoon trade helped the index recoup losses seen earlier in the day.

The Nikkei average gained 0.7% to 21,419.23, its highest closing level since February 28.

“Today’s rally is largely a short-covering move by macro hedge funds. It’s happening not only in Japan but also in the U.S. market,” said Masanari Takada, cross-assets strategist at Nomura Securities.

E-Mini futures for the S&P 500 were last quoted 0.7% higher in late Asian trade.

The broader Topix added 1% to 1,549.47, its highest finish since February 27, with all but five of the 33 sector sub-indexes on the Tokyo exchange closing in positive territory.

Financial stocks notched sharply higher, with securities , insurance and banking among the best-performing sectors on the main bourse.

Dai-ichi Life Holdings jumped 6.3%, Nomura Holdings advanced 5.7% and Mitsubishi UFJ Financial Group (MUFG) climbed 3.6%.

Bucking the overall market, semiconductor-related companies came under pressure amid rising tensions between the United States and China, with Tokyo Electron Ltd and Advantest Corp shedding 3.6% and 2.7%, respectively.

U.S. President Donald Trump said late on Tuesday he was preparing to take action against China this week over its plan to impose national security laws on Hong Kong, but gave no further details.

Transport companies also fell as investors locked in profits from recent gains, with West Japan Railway Co losing 2.8% and ANA Holdings Inc declining 2.0%.

Air and land transport companies rallied earlier this week as investors cheered Japan’s decision on Monday to lift the coronavirus-induced state of emergency nationwide.

The turnover of Tokyo’s main board was 2.88 trillion yen ($26.8 billion), a one-month high. ($1 = 107.5300 yen) (Reporting by Tomo Uetake; Editing by Subhranshu Sahu and Devika Syamnath)

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