May 7, 2013 / 7:06 AM / 4 years ago

Nikkei jumps 3.6 percent to 5-year high led by exporters

4 Min Read

* Exporters lead market after strong U.S. jobs data
    * Long-only investors buy Japanese stocks - broker
    * Mood will rely on U.S. econ data for a while - analyst

    By Ayai Tomisawa
    TOKYO, May 7 (Reuters) - The Nikkei average jumped 3.6
percent on Tuesday to break above 14,000 for the first time in
nearly five years, with exporters leading the gains after last
week's strong U.S. jobs data eased concerns over the health of
Japan's major export market.
    The Nikkei gained 486.20 points to 14,180.24, its 
highest closing level since June 2008. Markets were closed in
Japan 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.
    Exporters were notable gainers, with Sony Corp 
advancing 6.4 percent, Toyota Motor Corp rising 4.9
percent, and semiconductor equipment maker Tokyo Electron Ltd
 gaining 6.8 percent.
    Sony was the most traded stock on the main board by
turnover, while Toyota took second spot.
    The broader Topix rose 3.1 percent to 1,188.57, with
3.18 billion shares changing hands, compared to last month's
average daily volume of 4.31 billion shares.
    "People had sold and shorted Japanese stocks before the
Golden Week holidays as they wanted to take profits before the
U.S. jobs data was out," said Kyoya Okazawa, head of global
equities and commodity derivatives at BNP Paribas.
    "Strong U.S. jobs data lifted sentiment."
    The stronger-than-expected U.S. payrolls report on Friday
reignited investor confidence after weak economic data from the
euro zone and China had fueled concerns over the global growth
outlook.
    "Aside from the U.S. market, there is no other cash market
they are interested in getting into besides the Japanese
market," Okazawa said.
    The United States is Japan's biggest export market, followed
closely by China.
   
    WEAK YEN TREND 
    Investor sentiment was also helped by renewed weakness in
the yen, which fell as low as 99.46 on Monday on the back
of the U.S. job data. The yen last traded at 98.97 yen to the
dollar.
    The Japanese currency has weakened 23 percent against the
dollar since mid-November while the Nikkei has jumped 64 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 economic stagnation.
    But market participants said that there have been worries
that Japan may face further criticism from its global trade
competitors that its aggressive monetary easing caused the yen
to weaken.
    "As soon as people think the weak yen trend is led by the
strong dollar on the back of the improving U.S. economy and not
by Japan's monetary easing, investors will be relieved and the
Nikkei will probably gain further," said Hikaru Sato, a senior
technical analyst at Daiwa Securities. 
    "Till then, the market may be swayed by U.S. economic
indicators such as retail sales, and depending on the outcome,
investors may take profits."
    He added that investors are also focused on Japanese
corporate earnings, and companies that disappoint the market
took hit a hit on Tuesday.
    Idemitsu Kosan Co Ltd fell 1.2 percent after the
oil refiner said its operating profit fell 20 percent on the
year to 110.7 billion yen ($1.11 billion) in the fiscal year
ended March 31, due to reduced refining margin.
    McDonald's Holdings Co shed 2.0 percent after the
company said its operating profit for Jan-March declined 53.3
percent on year to 3.37 billion yen, hit by rising raw material
costs due to the weakening yen.
    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.

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