Nikkei set to test 32-month high on monetary easing hopes

Thu Jan 17, 2013 6:43pm EST

TOKYO, Jan 18 (Reuters) - Japan's Nikkei share average is
set to test a 32-month high on Friday as exporters are expected
to gain after a fall in the yen on expectations that the central
bank will ease monetary policy aggressively next week.
    Citing sources familiar with the central bank's thinking,
Reuters reported on Thursday that the BoJ next week will
consider removing the 0.1 percent floor on short-term interest
rates and commit to open-ended asset buying until the 2 percent
inflation target is reached. 
    The central bank's policy meeting is scheduled on Jan.
21-22.
    "There still is strong expectation on Abenomics," said
Hiroichi Nishi, assistant general manager of equity information
department at SMBC Nikko Securities, referring to Prime Minister
Shinzo Abe's push to pressure the central bank into aggressive
policy easing.
    Nishi added that the market is increasingly encouraged by
the prospect of exporters' earnings growing at a better pace in
the coming years.
    The Nikkei has rallied about 22.5 percent over the past two
months, buoyed by a weaker yen. On Thursday, the yen fell to a
more than 2-1/2-year low of 90.14 yen to the dollar. The yen
last traded at 89.89 yen to the dollar. A weak yen lifts
exporters' overseas earnings when repatriated.
    Market players said the Nikkei was likely to trade between
10,750 to 10,950 on Friday after ending up 0.1 percent at
10,609.64 on Thursday.
    The 11,000-line, a level not seen since April 2010, is in
sight if the yen weakens further and nears 91 during the day,
analysts added.
    Nikkei futures in Chicago closed at 10,860, up 230
points from the close in Osaka of 10,630.
    Analysts also noted that while data showing a recovery in
the U.S. economy will be a tailwind to the Japanese market in
the long term, U.S. earnings may have a negative impact
especially in the very near term after Intel Corp 
disappointed the market with poor earnings.
    Intel's shares fell 5.2 percent in extended-hours trading
after the company forecast quarterly revenue that fell short of
analysts' expectations. 
    Meanwhile, the number of Americans filing new claims for
unemployment benefits fell to a five-year low last week and
housing starts jumped last month to the highest since June 2008.
 
    "The market is upbeat with hopes for easing, but it's
Friday, so overall, gains may be modest at the end of the day,"
said Yutaka Miura, a senior technical analyst at Mizuho
Securities.    
 
> Housing, job-market data push S&P to 5-year high         
> Yen drops to more than two-year low vs dollar; euro on a
tear 
> U.S. bonds slump as upbeat housing data spur sales      
> Platinum rises above gold again on bullish US data     
> Oil rises on improving U.S. jobs, housing data          
    STOCKS TO WATCH
    
    --Nissan Motor Corp Ltd 
    Nissan said it has dropped the U.S. price of the 2013 Leaf
electric vehicle by more than $6,000, to $29,650.
 
    
    --Softbank Corp 
    Softbank said on Thursday that it would sell a part of its
stake in eAccess Ltd, representing around 67 percent of voting
rights held in preferred shares, to a fund owned by Samsung
Electronics Co and 10 others.
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