Nikkei sees robust gains as yen weakens, exporters get boost

Tue Oct 16, 2012 9:47pm EDT

* Weaker yen boosts exporters
    * Strong financial earnings in the U.S. improves sentiment
    * Chipmakers lose out after Intel disappoints

    By Sophie Knight
    TOKYO, Oct 17 (Reuters) - Japan's Nikkei share average took
a big step up in early trade on Wednesday as the yen eased to a
one-month high against the euro and dollar and as Goldman Sachs'
 impressive revenues helped dampen fears about
disappointing earnings.
    Exporters were given a leg up as the yen hit 103.51 versus
the euro after rating agency Moody's stopped short of
downgrading Spanish bonds to "junk" status, affirming them at
BAA3 in light of the ECB's promise to buy the bonds if needed.
   "The fact that they didn't drop it is a plus, and the yen is
weaker against the dollar as well, which will lend support to
the market today," said Kenichi Hirano, operating officer at
Tachibana Securities.
    A strong yen has prompted fears of further cuts to earnings
forecasts for exporters as it erodes their revenues garnered
abroad once repatriated. 
    The weaker yen helped Toyota Motor Corp outperform
with a 1.8 percent gain on Wednesday and it was the second-most
traded stock on the main board by turnover, while Sony Corp
 picked up 2.9 percent to a three-week high.
    Those gains helped the Nikkei climb 1.5 percent to
8,830.84, above its 14-day moving average at 8,741.81, while the
broader Topix added 1.3 percent to a 2-1/2-week high of
742.11.
    Following upbeat earnings from Citigroup Inc in the
previous session, Goldman Sachs beat expectations overnight as
its revenue more than doubled and it raised its quarterly
dividend.
    The securities sector jumped 2 percent, and even
news that Nomura Holdings Inc will have to pay a 300
million yen ($3.8 million) fine for leaking information could
not dent its advance of 2.2 percent.
    "I think that the weakness in the global economy and the
expectations of poor earnings were pretty much priced in last
week and now we're recovering from that sell-off," said Masayuki
Otani, chief market analyst at Securities Japan.
    "Consensus cooled down quite a lot and now people are
realising it might have gone too far."
    The benchmark dropped 3.7 percent last week, its biggest
weekly fall since May, after a stream of profit warnings sparked
fears of earnings coming in lower than expected, due to a global
slowdown, anti-Japanese sentiment and the robust yen.
    Yet, several Japanese companies are using the strong yen to
their advantage by snapping up foreign firms at reasonable
prices, a trend brought into focus by Softbank Corp's 
$20 billion deal to buy a 70 percent stake in Sprint Nextel Corp
, announced this week.
    The mobile provider, an index heavyweight, added 4.1 percent
to extend Tuesday's 9.6 percent rise on CEO Masayoshi Son's
assurance that the move would not dilute Softbank shares. The
shares dropped 20 percent between Friday and Monday on
uncertainty about how the deal would be funded.
    On Wednesday, major trading house Mitsubishi Corp 
added 0.8 percent after the Nikkei daily said it would buy a 20
percent stake in Indonesian utility Star Energy for $200
million, aiming to double capacity of a geothermal plant in West
Java by 2017.  
    "When the yen is moving in a tight range as it is now, it
doesn't matter so much to the companies buying up foreign
firms," Otani said. 
    "But for exporters it would really help if it eased a little
more and made it up to 79 yen to the dollar," he added. 
    Going against the market, chipmakers sagged after Intel Corp
, the world's largest chipmaker, forecast gross margins
for the current quarter below expectations. 
    Tokyo Electron Limited, Ibiden Co Ltd and
Advantest Corp fell between 0.7 and 3.6 percent.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.