Japan Leads Asian Stock Markets Higher on Stimulus Hope

Meanwhile, the benchmark Nikkei 225 index closed up +0.95 percent at 16,385.89, and the broader Topix index closed 0.84 percent higher to 1,311.16 points.

According to these analysts, Abe is preparing the groundwork for “helicopter money” by signalling that he wants to take advantage of the Bank of Japan’s zero-interest-rate policy to issue bonds that will finance public-private partnerships.

Speculation that Japan’s central bank may also move at its meeting later this month added to the improved sentiment. “It is inconceivable that United States shares will crumble when real interest rates are negative”, said Hisashi Iwama, senior portfolio manager at DIAM.

Japanese stocks on Friday barreled toward their best week in six-and-a-half years, leading gains across Asia amid relief over a weakening yen and signs of economic firming in China.

Indeed, defensive stocks were the best performing S&P 500 sector since the previous record: utilities, telecoms and consumer staples, all with double-digit percentage gains.

“Globally we are seeing an environment where investors are buying riskier assets and that is putting the yen under pressure” said Petr Krpata, currency strategist at ING.

The Nikkei index ended up 2.5 percent, adding to the four percent surge clocked up Monday as the yen retreated against the dollar following a huge win for Japanese Prime Minister Shinzo Abe’s coalition in weekend elections.

The package could be worth around 10 trillion yen ($97 billion), Japanese media said, though earlier reports put the possible amount at double that figure.

Besides fiscal spending, there is also focus on whether the Bank of Japan will expand its monetary stimulus at its policy meeting later this month, especially after former U.S. Federal Reserve Chairman Ben Bernanke told Abe that the BOJ has steps left available to support the economy.

Against this backdrop, the dollar rose 2.2 percent against the yen to 102.68 on Monday, marking its biggest daily gain since October 2014.

Bernanke plans to meet Abe on Tuesday.

Central Security Patrols climbed 166 yen, or 8.0 percent, to 2,240 yen after the security services company upgraded Wednesday its profit estimates for the business year through February, helped by security services it provided at the Group of Seven summit in Mie Prefecture in May.

The British pound gained 0.7 percent to $1.3080 as weeks of political turmoil appeared to ease on news Interior Minister Theresa May have cleared the path to become Britain’s prime minister on Wednesday.

A rate cut could undermine the sterling’s dwindling yield attraction among major currencies and push it further, possibly below its 31-year low just under $1.28 hit on July 6.

Europe’s main stock markets fell on Friday, with sentiment hit by the fatal Nice truck attack, offsetting Wall Street records and positive Chinese data. It also dipped 0.4 percent y/y in May, compared to -0.1 percent y/y in April. The euro rose to $1.1059 from $1.1049.

Their recovery early this year has stalled on a barrage of factors including disappointing drawdowns in USA crude and gasoline, rising United States oil drilling rig count and cuts in bullish hedge fund bets on crude to four-month lows.

Trading house Itochu rose 16.50 yen, or 1.3 percent, to 1,316.50 yen after it announced Thursday that it has formed an alliance with Brazilian aerospace company Embraer Executive Jets and will start importing jet planes.