Nikkei 225 Rebounds as Investors Pivot to Bargain Hunting

The Japanese stock market saw a significant recovery on Tuesday, with the benchmark Nikkei 225 Index climbing 316.81 points, or 1.12%, to reach 28,600.73. This upward move follows a period of volatility and recoup some losses from previous sessions, with the index touching a high of 28,718.70 during the day. The rally was driven by a combination of bargain hunting and a shift in sentiment regarding the latest coronavirus variant, which reports suggest may be milder than initially feared. This local optimism was further supported by a strong performance in U.S. markets, where the Nasdaq surged 1.9% and the S&P 500 rose 1.3% in the prior session. Sector-wide gains were evident, particularly in technology and automotive stocks. Toyota and Honda saw gains of nearly 2% and 1% respectively, while tech firms like Advantest and Tokyo Electron rose by 3% to 4%. Financials also trended higher, with Mitsubishi UFJ Financial gaining over 1%. Conversely, Nissan Motor bucked the trend, falling nearly 3%. On the economic front, Japan's unemployment rate for October was reported at a seasonally adjusted 2.7%, beating the expected 2.8%. However, industrial production data was mixed; while it rose 1.1% month-on-month, it missed the 1.8% forecast and fell 4.7% on a yearly basis, leading the Ministry of Economy, Trade and Industry to describe production as currently pausing. The broader market sentiment remains sensitive to global health news and U.S. equity cues. With the U.S. dollar trading in the high 113 yen range and crude oil futures recovering to $69.95 per barrel, Japanese exporters are finding a supportive environment for a short-term rebound.