Nikkei up on hopes for robust U.S., Japan earnings
Target price hikes for Google and earth-moving equipment maker Caterpillar have bolstered hopes that the world's No.1 economy is on a sustainable recovery path and sent U.S. stocks higher, despite weak results from Citigroup.
The Nikkei has climbed 3 percent this year and is up 15 percent since the start of November after many foreign investors changed their stance on laggard Japanese stocks to neutral from underweight.
"Retail investors are joining foreigners, but they are mostly buying small and mid-size cap shares, concentrating on news for particular sectors or individual companies," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
Analysts said such a buying pattern was behind Wednesday's surge in textiles , which outperformed other sectors with a rise of 3.1 percent helped by an across-the-board hike in share price targets by Goldman Sachs on attractive valuations.
Toray Industries Inc, Japan's largest maker of synthetic fibres, jumped 4.7 percent to 556 yen and Teijin Ltd surged 6.6 percent to 421 yen, becoming the biggest percentage gainer among the Nikkei 225 components.
Brokers said individual investors now stand for some 30 to 40 percent of the market, indicating that the mood remains upbeat.
"This pattern will likely stay unchanged for a while, pushing upgraded stocks and individual sectors higher on high volume," said Masayuki Otani, chief market analyst at Securities Japan, Inc.
"But advances in the whole index are limited as investors consolidate around new levels and slowly brace for a small correction, which may be triggered once all positive factors linked to robust earnings disappear after companies have reported later this month."
The benchmark Nikkei ended the day up 0.4 percent or 38.12 points at 10,557.10.
Resistance now looms at 10,620.57, an eight-month peak marked last week, market players said. If that level is breached, the next target investors are eyeing is 10,638.23, a high hit in May last year.
The broader Topix index rose 0.6 percent to 936.87.
With individual investors actively buying, trading volume was firm, with 2.2 billion shares changing hands on the Tokyo Stock Exchange's first section, slightly below last week's average of 2.3 billion.
SMELTERS ADVANCE
Non-ferrous metals smelters were also among the Nikkei's top gainers, with the sector index adding 2.5 percent as copper hovered near record highs on Wednesday on a weaker dollar.
Sumitomo Metal Mining gained 4.9 percent to 1,456 yen and Dowa Holdings climbed 5.2 percent to 592 yen.
Market participants said foreign buying is set to continue on expectations Japanese companies will show further improvements in their October-December earnings, but also stressed that earnings are still well below levels from before the financial crisis.
"The 300 companies that best represent the Japanese economy would have to post year-on-year increases of up to 14-15 percent to seriously beat market expectations," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.
Market will also look for news about how well-prepared the firms are to sustain an earnings recovery in the long run. Chibagin's Osakabe mentioned cost control, structural changes, exposure to growing Asian markets and foreign currency hedging as key focal points for the market.
Social network and gaming company Gree was up 3.4 percent at 1,174 yen after announcing on Tuesday it would go into the smartphone ad network business, connecting advertisers with websites that want to run advertisements.
News From: reuters.com
No comments:
Post a Comment