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Japan’s Nikkei 225 rebounds after sharp falls

Japan’s stocks rebounded today as the Nikkei 225 closed up 5.68 per cent to 9,094.

The index registered a fall of over almost 17 per cent on Monday and Tuesday this week following the earthquake and tsunami which hit the country on Friday and has claimed over 10,000 lives.

Many commentators have been bullish on the economy following the falls, however nuclear concerns remain with reports of another fire at the Fukushima Daiichi nuclear plant.

Stocks leading the bounce included financial companies, exporters and car companies such as Toyota and Nissan Motors.

The S&P 500 closed down 1.12 per cent to 1,282.

PSigma Investment Management chief investment officer Tom Becket says the lack of certainty over the nuclear threat and the devastating impact of the earthquake and tsnami, which have claimed the lives of over 10,000 people, make short-term equity judgements redundant.

However he believes the medium term picture is more solid. He says: “The facts that were important for Japanese companies before this crisis, such as an improving global economy and cheap valuations, remain in place.”

Rathbone Unit Trust Management head of multi-asset investment David Coombs has marginally raised his Japanese equities allocation following market falls early this week.

Coombs says the main outstanding concern remains the nuclear issue, something he is unable to make a call on.

He says: “Japan has suffered more crisis than most, like the Kobe disaster in 1995. It is a sophisticated economy and its people have proved resilient in the past. Increased liquidity has been pumped in and with corporates being involved in the recovery, I expect GDP to be accretive on the back of having to rebuild.”

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