Nikkei closes at 5-month high on corporate growth optimism

Japan’s Nikkei share average rose to a five-month high at the close on Friday as investors bet on corporate growth next year after recent news from automakers lifted sentiment.

The Nikkei rose 1.8 percent to 40,821.16, its highest close since July 17. The index posted gains for a third straight session and is up 4 percent this week, its strongest weekly performance since September. The broader Topix index rose 1.26 percent to 2,801.68, according to Reuters.

“The market welcomed recent news from domestic companies, such as merger talks between Honda and Nissan, which reinforced expectations that Japanese companies will continue to improve investor returns,” said Kentaro Hayashi, chief economist at Daiwa Securities.

Honda and Nissan said this week they were in talks about merging by 2026, a historic turning point in Japan’s auto industry that reflects the threat that Chinese electric car makers now pose to some of the world’s biggest automakers.