Nikkei rallies above 14,000 for first time since June 2008

Mon May 6, 2013 9:16pm EDT

* Nikkei rises 2.8 pct, Topix gains 2.6 pct
    * Exporters lead the market after strong U.S. jobs data

    By Dominic Lau
    TOKYO, May 7 (Reuters) - Japan's Nikkei average soared 2.8
percent on Tuesday morning to break above 14,000 for the first
time since June 2008 as the market played catch-up from an
extended holiday, with last week's strong U.S. jobs data easing
concerns over the health of Japan's biggest export market.
     The Nikkei was up 378.71 points at 14,072.75 after
closing for public holidays on Friday and Monday. Tuesday's
rally took the benchmark above 13,988, the 61.8 percent
retracement of its slide from February 2007 to October 2008.
    A senior dealer at a foreign bank said their buy orders
outpaced sell by 2-1/2 times.
    "We picked up a very decent size buy programme out of the
domestic accounts," he said. "I think smart money domestic
(investors) are sellers at around 15,000. They are not going to
sell here. The market can keep going."
    But he added Japanese corporate earnings "are a little bit
crappy ... people are just a little bit disappointed." Of the 65
Nikkei companies that have reported quarterly earnings so far,
54 percent of them either beat or met market expectations,
according to Thomson Reuters StarMine. 
    A stronger-than-expected U.S. nonfarm payrolls for April,
with 165,000 jobs being added and the unemployment rate falling
to 7.5 percent, the lowest since December 2008, provided much
needed relief to investors rattled by a series of soft data in
recent weeks.
    The United States is Japan's biggest export market, followed
closely by China. A run of soft data from China was also a
factor in the recent selloff in commodities and other riskier
markets. 
    Japanese exporters led the rally, with Toyota Motor Corp
, Honda Motor Co, Sony Corp,
semiconductor equipment maker Tokyo Electron Ltd and
Suzuki Motor Corp up between 3.3 and 5.5 percent.
    Sony was the most traded on the main board by turnover,
while Toyota took third spot.  
    The sector was also helped by the renewed weakness in the
yen, which has fallen 1.1 percent against the dollar to
99.17 since Thursday.
    The Japanese currency has weakened nearly 24 percent against
the dollar since mid-November while the Nikkei has jumped 62
percent after Prime Minister Shinzo Abe began promising to
revive the economy with expansionary monetary and fiscal
policies, dubbed as "Abenomics", during his election campaign.
    The yen's declines gathered fresh momentum after the Bank of
Japan's April 4 announcement of a radical monetary expansion
campaign to end two decades of stagnation.
    The broader Topix index advanced 2.6 percent to
1,183.58. 
    JPMorgan said it expected the Nikkei to trade around 14,150
based on the correlation between the yen/won exchange
rate and the Tokyo's index. The yen hit a more than five-year
low of 11.0057 won on Tuesday.   
    "According to regression analysis, the sensitivity in the
Nikkei against JPY/KRW movements strengthened since mid-March,"
it said in a note.
    "While Japan's stock market was closed last Friday and
Monday, the current JPY/KRW level suggests the Nikkei index
should be 14,150."
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