Nikkei rises 0.9 pct on earnings hopes, Fed policy support

Sun Oct 20, 2013 10:14pm EDT

* Hopes Fed tapering will be delayed to next year also
positive - analysts
    * All of Topix 33 subsectors in positive territory
    * Nikkei could rise towards 18,000 by end of 2014 - fund
manager

    By Ayai Tomisawa
    TOKYO, Oct 21 (Reuters) - Japan's Nikkei share average rose
above 14,700 for the first time in three weeks, underpinned by a
strong performance on Wall Street and expectations the Federal
Reserve will delay trimming its economic stimulus programme.
    After last week's deal by U.S. lawmakers that ended a 16-day
government shutdown, investors have started to speculate that
the Fed will extend its $85 billion-a-month bond-buying stimulus
 into next year.
    The prospect of the easy money programme being retained for
longer helped drive the Nikkei up 0.9 percent to
14,695.09 in mid-morning trade. It rose as high as 14,727.85
earlier, the highest since Sept. 27.
    On Friday, the S&P 500 closed at a record high for the
second straight day helped by stronger-than-expected earnings
from the likes of Google and Morgan Stanley.
    The improved earnings had a knock-on effect in Tokyo where
analysts are also anticipating a solid profit season for Japan
Inc.
    Toyota Motor Corp rose 1.0 percent, Panasonic Corp
 added 1.8 percent and Canon Inc advanced 0.8
percent.
    "Investors were reassured by strong earnings and the feeling
that the U.S. economy is resilient raised their appetitive for
risk," said Hikaru Sato, a senior technical analyst at Daiwa
Securities.
    The Topix advanced 0.5 percent to 1,212.07, with all
of its 33 subsectors in positive territory.
    Other notable gainers included Suzuki Motor Corp,
which jumped 2.7 percent after the Nikkei reported that the
automaker is likely to have posted an operating profit of about
90 billion yen for the April-September period, up more than 30
percent on year.
    Market players said the Nikkei should gain further on
expectations of strong second-quarter earnings and upgrade to
profit forecasts for this fiscal year through March. The
earnings releases will hit the market later this week.
    Masayuki Kubota, a senior fund manager at Daiwa SB
Investments, said it may be difficult for the Nikkei to breach
its May high of 15,942.60 this year, but expects the benchmark
to advance a further 20 percent from its current level within
the next 12 months.
    "On the assumption that the Nikkei will be bought on
expectations that it will trade 15 times its projected earnings
for the next fiscal year (through March 2015), I think it could
rise towards 18,000 by the end of next year."
    The benchmark index is up 41 percent so far this year,
buoyed by the Japanese government's aggressive monetary and
fiscal stimulus policies.