Asian shares gain on stimulus hopes

Asian shares rose on Tuesday and the yen tumbled as investors welcomed Japanese Prime Minister Shinzo Abe’s call for further monetary stimulus.

Japan’s Nikkei 225 ended up 2.5%, China’s Shanghai Composite rose 1.8%, Hong Kong’s Hang Seng closed up 1.7% and Korea’s Kospi nudged up 0.1%.

Abe, whose party and coalition won a majority in upper-house elections on Sunday, said he wants “the swift formulation of comprehensive, bold economic measures", underpinning the positive mood in equity markets.

Growing expectations of further stimulus to combat low inflation and weak growth dented the yen, which fell to a one-week low against the US dollar.

Naeem Aslam, chief market analyst at Think Markets, said: “The recent strength of the Japanese yen has served as a massive headache for export based firms thus far; a reaction by the government was inevitable. No one is certain how big this new stimulus will be, nonetheless the expectations are that it will be sufficient and adequate.”

Meanwhile, Deutsche Bank’s Jim Reid said: “Our Japanese economists are noting that the market is expecting a package in the range of JPY10-20tn and the Nikkei newspaper also suggested that the government is considering issuing new debt for the first time in four years.”

In Australia, the benchmark S&P/ASX gained 0.3% to close at a fresh one-month high as political uncertainty receded and as investors digested encouraging business confidence data.

National Bank of Australia’s survey of business conditions rose to a reading of 12 in June, up from 10 the previous month and marking the highest level since October 2014. In addition, business confidence advanced to 6 from 3 in May.

Stronger metals prices also helped the Australian index to make gains, with BHP Billiton spinoff South 32 and Fortescue Metals both up sharply as iron ore prices rose.

Gold miners did not fare as well, however, with Newcrest and Evolution Mining both in the red as gold prices declined.

On the corporate front, shares in Nintendo Co surged in Tokyo as it continued to benefit from the success of its new Pokemon Go smartphone game, which debuted at the top of the US gaming charts last week.