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Nov. 10, 2016, 6:33 a.m. EST

Nikkei leaps nearly 7% as investors reassess Trump win

Big gains as investors cautiously optimistic of Trump presidency

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By Kenan Machado and Kosaku Narioka


AFP/Getty Images
A construction site in Tokyo. Japanese stocks surged Thursday on the prospect of a construction boom in the U.S.

Asian shares rose broadly Thursday, as global investors chose to focus on the upsides of a Donald Trump presidency after a sharp selloff in the region the previous day.

Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.26%   gained 6.7% on Thursday, its biggest single-day gain since Feb. 15, more than making up for Wednesday’s 5.4% fall. Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.65%   added 2.3% and Singapore’s Straits Times Index /zigman2/quotes/210597985/delayed SG:STI -0.30%   was higher by 1.5%.

“His victory surprised everyone but I think people noticed a reconciliatory tone in his speech,” said Alex Furber, senior client services executive at CMC Markets. “Analysts are scratching their heads but I think the key now will be with what Trump actually does versus what he has said.”

In Australia, the S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.38%   gained 3.3%, led by commodity stocks as prices recovered, with iron ore surging 4.7% to its highest level year to date. Among key Australian resources firms, BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP -0.15%  and Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO +0.31%   gained 8.2% each.

The strength in Asian equities on Thursday came as stocks on Wall Street notched firm gains overnight, lifted by hopes that Trump’s plan to cut corporate taxes and ease rules regarding the repatriation of firms’ overseas cash will boost the U.S. economy.

Meanwhile, Japanese stocks surged, with analysts noting that Trump’s possible push on infrastructure spending and other initiatives could benefit local infrastructure companies, as well as industrial-robot and electronic-parts makers.

Industrial giant Hitachi Ltd. /zigman2/quotes/203839937/delayed JP:6501 +0.85%  was up 10.6%, robot maker Fanuc Corp. /zigman2/quotes/202054799/delayed JP:6954 +0.79%   was up 7.2%, and Honda Motor Co. /zigman2/quotes/200490352/delayed JP:7267 +0.68%   surged 9%.

“There is a tide of positive assessment of Trump’s economic policies,” said Takashi Ito, a strategist at Nomura Securities. “We aren’t sure if he can do everything he has said he would, but if some of that materializes, that’d be good news for the U.S. economy,” he said.

Japanese life insurers also benefited as the country’s government-bond yields rose, tracking gains in the U.S. Higher bond yields help insurers improve profitability.

Dai-ichi Life Holdings /zigman2/quotes/208507587/delayed JP:8750 +2.49%   rose 11.6% and T&D Holdings /zigman2/quotes/208425761/delayed JP:8795 +1.89%   surged 13.1%.

In U.S. trading on Wednesday, stock markets reversed earlier flips to end up with the S&P /zigman2/quotes/210599714/realtime SPX -1.79%  losing up 1.1% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.40%  rising 1.4%.

Traders also shrugged off earlier worries over Trump’s tough rhetoric against China, with the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.08%   ending up 1.4%, and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.92%   closed up 1.9% in late afternoon trade.

In Hong Kong, shares of China Vanke /zigman2/quotes/203851375/delayed HK:2202 -2.20%   closed up 4.4%, having earlier surged as much as 5.8%, after rival China Evergrande /zigman2/quotes/208605330/delayed HK:3333 +8.55%   further raised its stake in the Chinese developer.

Evergrande’s growing stake in Vanke comes amid a prolonged shareholder tussle for control in the Chinese developer, which is at the center of a takeover battle initiated by less-known Baoneng Group.

But concerns over the outlook of the U.S. market capped gains among Hong Kong stocks with heavy U.S. exposure. Blue-chip Li & Fung   , which sources goods for key U.S. retailers, erased gains made in morning trade and closed down 0.8%. The stock had fallen 4.5% on Wednesday.

Analysts say the markets will now refocus on the Federal Reserve’s action in December. Market expectations of a U.S. interest-rate rise next month has given way to doubts of any increase at all this year, following the Trump victory.

“I am off the election now,” said Stephen Innes, head of trading for the Asia Pacific region at currency broker Oanda in Singapore. “I am certainly changing my December Fed hike view from a certainty to a 50:50 chance.”

—Saurabh Chaturvedi, Rhiannon Hoyle, Joanne Chiu and Robb M. Stewart contributed to this article.

Click to Play

Michael Moore joins NYC anti-Trump protest

Filmmaker Michael Moore joined a group of anti-Donald Trump protesters on the streets of Manhattan. Credit: Anastasia Zavgotodni via Storyful

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27,892.47
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Volume: 0.00
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JP : Japan: Tokyo
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