/ |

Nikkei reaches 26-year high, boosted by earnings outlook and weak yen

Kyodo

The Nikkei 225 average ended Tuesday at its highest level in 26 years and two months as sentiment was boosted by a halt in the yen’s rise against the dollar and expectations for upcoming earnings results from major companies.

The benchmark Nikkei ended 236.93 points, or 1.0 percent, higher at 23,951.81, its highest close since Nov. 15, 1991. The broader Topix, which includes all first section issues on the Tokyo Stock Exchange, finished 10.35 points, or 0.55 percent, higher at 1,894.25.

Gainers were led by electric appliance, information and communication, and transportation equipment issues.

Market capitalization on the first section reached a record ¥701.72 trillion.

After shares advanced in the morning, buying accelerated as caution about the yen’s further appreciation eased as the dollar rebounded to just below the ¥111 line. The U.S. currency fell to a four-month low Monday.

The pause in the yen’s climb supported investor sentiment, helping boost export-linked issues including automakers and electric appliance companies, said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

The market was also buoyed by a rise in U.S. stock futures during Tokyo trading hours, with U.S. financial markets closed Monday for a national holiday.

“As Dow futures rose (over) 150 points, the Dow index may break through the 26,000 milestone tonight, boosting hopes that the Nikkei will catch the tailwind to recover to the 24,000 level,” Miura said.

Tokyo stocks have gained significantly since the start of 2018 on global market strength amid optimism about economic expansion, brokers said.

“Market participants anticipate a global market rally will occur again after the U.S. market resumes,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Overseas investors chased the market’s upside amid expectations of strong earnings results” for Japanese firms in the April-December quarter, which will be released starting next week.

On the first section, declining issues outnumbered advancers 980 to 972, with 111 ending the day unchanged.

Among exporters, Toyota Motor rose ¥80, or 1.0 percent, to ¥7,733, while Subaru advanced ¥97, or 2.6 percent, to ¥3,807.

Information technology service provider Obic climbed ¥560, or 6.6 percent, to ¥9,030, after the Nikkei business daily reported Tuesday the company is likely to report a rise of about 20 percent in group operating profit for the April-December period from a year earlier.

Some high-priced shares and undervalued domestic demand-related issues also drew buying ahead of the upcoming earnings reports in Japan, the brokers said.

Fanuc, an industrial robot maker and heavily weighted index component, advanced ¥1,530, or 4.8 percent, to ¥33,450 and Fast Retailing rose ¥1,400, or 2.8 percent, to ¥50,940.

Cosmetics maker Shiseido was up ¥172, or 3.1 percent, at ¥5,752.

Trading volume on the main section fell to 1.318 billion shares from Monday’s 1.422 billion.