TOKYO: Japanese stocks jumped nearly three percent in opening trade on Monday as investors cheered Tokyo winning its bid to host the 2020 Olympics, good news for construction, real estate and sportswear firms.
The Nikkei 225 index, which fell 1.45 percent on Friday, shot up 2.82 percent, or 390.65 points, to 14,251.46 in early trade. The benchmark index was 2.22 percent higher by mid-morning.
"Tokyo's hosting the Olympics, and the ongoing yen weakening trend, combined with improving global economic outlook will likely offset negative factors such as weaker-than-expected US jobs data and concern over US military action in Syria," said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.
Shares of companies that could benefit from 2020 Summer Olympics-related demand soared.
"Based on past data, Olympics-related shares such as infrastructure could rise for about a month until the decision on a sales tax hike is made," said Eiji Kinouchi, senior strategist at Daiwa Securities Capital Markets.
Leading construction firm Kajima soared 12.74 percent to 407 yen while Shimizu jumped 10.33 percent to 491 yen. Major real estate firm Mitsui Fudosan added 7.59 percent to 3,470 yen.
Traders said in addition to the expected lift from infrastructure spending, the Olympics would give the market a psychological boost and help Prime Minister Shinzo Abe's pro-spending economic programme, dubbed "Abenomics".
"The Nikkei will likely rise to 15,000 by the end of September on the back of renewed hopes for Abenomics," said Mitsushige Akino, fund manager at Ichiyoshi Asset Management.
"The Olympics will likely regenerate interest in Japanese equities among foreign investors as it will make it easier for Mr. Abe to move forward with his growth strategies, and the implementation of a consumption tax hike and corporate tax cuts," he added.
Abe is considering whether to go ahead with a planned sales tax hike in April that many fear could derail any recovery. The move could see consumption taxes double to 10 percent by 2015.
The market was also supported by relief over data that confirmed Japan's economic recovery is on track.
Before the Tokyo exchange opened Monday, Japan revised upwards growth data for the April-June quarter, with the world's number-three economy expanding 0.9 percent from the previous three months, compared with an initial 0.6 percent estimate.
Hisao Matsuura, strategist at Nomura Securities, said the revised GDP figures "show that Japan's economic recovery is on the right track".
Capital spending among the nation's firms rose sharply which could see an improvement in household spending and labour market conditions, he added.
US stocks Friday finished a volatile day little changed despite uncertainty over Syria and a disappointing jobs report with the Dow Jones Industrial Average slipping 0.10 percent to 14,922.50.
On currency markets Monday, the dollar was at 99.63 yen in Tokyo morning trade against 99.11 yen Friday afternoon in New York where the greenback slid after the US government reported the economy had added a less-than-expected 169,000 jobs in August.
The euro was at $1.3174 and 131.41 yen compared with $1.3180 and 130.62 yen in US trade.
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