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Nikkei rebounds on expectations for rosy earnings reports

JIJI

Stocks bounced back Monday on hopes that an upcoming wave of semiannual corporate earnings reports will show positive results.

The 225-issue Nikkei average gained 132.03 points, or 0.91 percent, to close at 14,693.57. On Friday, the key market gauge shed 24.97 points.

The Topix index of all TSE first-section issues ended up 6.84 points, or 0.57 percent, at 1,212.36 after losing 0.73 point the previous trading day.

The Nikkei average regained upward momentum after a dip Friday that snapped the key yardstick’s seven-session rising streak, thanks to a rebound on Wall Street late last week.

In New York Friday, the Dow Jones industrial average climbed to its highest closing in about a month on the back of brisk earnings reports from major businesses, including Google and General Electric.

In the Tokyo market, the Nikkei touched a three-week intraday high in early trading, helped by a weaker yen, which prompted futures-led buying. But the Nikkei’s topside was limited as investors took to the sidelines ahead of earnings reports and the delayed release Tuesday of U.S. jobs data for September, brokers said.

Although investors hold high expectations for good earnings, they cannot actively buy or sell until they actually see the reports, Ryuta Otsuka, strategist at Toyo Securities Co., said, adding that he is keenly awaiting data from automakers and construction firms.

An official at a bank-affiliated brokerage said that while the Nikkei turned top-heavy, hit by selling to cash in gains due to fears of overheating, the market was still supported by various factors, including high earnings expectations, Prime Minister Shinzo Abe’s reflationary policies as well as steady demand from overseas investors.

Technical charts show the market is still on an upward trend, which is also supportive of the Tokyo market, the official said.

Rising issues far exceeded falling ones 1,296 to 322 in the TSE’s first section, while 133 issues were unchanged.

Heavily weighted Nikkei component Softbank rose 2.75 percent after the mobile network carrier announced Saturday that it will acquire U.S. mobile phone distributor Brightstar. Rivals KDDI and NTT Docomo were slightly up.

Real estate issues were upbeat, with Mitsui Fudosan and Mitsubishi Estate both extending gains.

Camera maker Canon rose, while automaker Suzuki jumped more than 2 percent after a media report about brisk earnings.

On the other hand, automakers Nissan and Fuji Heavy Industries were downbeat.

JGBs in modest retreat

Japanese government bonds fell back modestly Monday.

The lead December futures contract on 10-year JGBs finished down 0.04 point from Friday at 144.72. Volume plunged to 12,933 contracts from 20,637.

In late interdealer trading in cash JGBs, the yield on the latest 330th 10-year issue with a 0.8 percent coupon was at 0.620 percent, up from 0.615 percent late Friday.

JGBs traded on a weak note due to a rise in the Nikkei stock average as market players took a wait-and-see stance in general.

It is difficult to make bets either way as there are no alternatives for investment, despite concerns about the JGB market’s overheating.