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Japan’s Nikkei ends at over 2-week high on Wall Street’s strength

Japan’s Nikkei index ended at a more than two-week high on Monday, tracking Wall Street’s solid finish last week, with heavyweights and travel-related stocks leading the gains.

The Nikkei rose 1.16% to 28,542.11, its highest closing level since Aug. 26. The broader Topix gained 0.75% to 1,980.22.

U.S. stocks rallied on Friday, with major indexes posting their first weekly gain in four weeks.

“Today’s gain was led by easing concerns about the pace of rate hikes in the U.S. market expectations have come closer to what the Federal Reserve is looking at,” said Shuji Hosoi, senior strategist at Daiwa Securities, indicating that the market sees an almost 90% chance the Fed will hike interest rates by 75 basis points.

“When risk appetite is improved, Japanese stocks are favoured as they are relatively cheap compared with their overseas peers.”

Heavyweights rose, with Uniqlo clothing owner Fast Retailing 2.29% and technology investor SoftBank Group jumped 2.49%. Chip making equipment maker Tokyo Electron rose 1.21%.

Travel and retail shares gained after a report said Japan’s government is considering scrapping its cap on the daily arrivals of overseas visitors by October.

Department store operators rose, with Isetan Mitsukoshi Holdings jumping 4.7% to become the Nikkei’s top gainer. Peers J.Front Retailing rose 2.61% and Takashimaya climbed 2.96%.

Railways and airlines were the top gaining sectors among the Tokyo Stock Exchange’s 33 industry sub-indexes, jumping 2.35% and 2.27%, respectively.

ANA Holdings and Japan Airlines gained 2.54% and 1.96%, respectively.

Keisei Electric Railway, which runs trains connecting to the Haneda airport, jumped 3.56%.

“These shares rose on the news (on scrapping the cap on overseas visitors’ daily arrivals) but whether tourists will really come to Japan will be another issue, because China’s outbound tourism is not picking up,” Hosoi said.

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