Nikkei rises on yen’s drop, strong U.S. data

Stocks gained ground Monday, backed by a drop in the yen and solid U.S. employment data released late last week.

The Nikkei 225 average rose 63.43 points to close at 17,711.93. On Friday, the key market gauge climbed 143.88 points.

The Topix finished 7.73 points higher at 1,424.92 after rising 7.08 points Friday.

The TSE opened this week with healthy gains after the yen’s weakness pushed the dollar above ¥119 at one point in early trading.

Although U.S. equities fell back Friday on worries about the Greek debt issue, better than expected U.S. jobs data for January helped improve investor sentiment in the Tokyo market, brokers said.

An official at a major securities firm said the jobs data reflected a strong recovery in the U.S. economy, with improvements in the closely watched hourly wage, as well as nonfarm payrolls.

After the initial buying ran its course, however, stocks came under profit-taking pressure.

The key indexes managed to remain in the plus side throughout the day, but their upside was capped due to a lack of fresh incentives.

An official of a foreign securities firm said investors had difficulty finding reasons for stepping up purchases as the market had already taken into account improved earnings reports from Japanese companies thanks to the yen’s recent drop.

A downgrade by U.S. rating agency Standard & Poor’s of its credit rating on Greece also weighed down the market, brokers said.

Yoshihiko Tabei, chief analyst at Naito Securities Co., said investors are still closely watching corporate earnings reports this week.

“A closer look reveals that October-December earnings were not necessarily good compared with a year before, considering such a rapid fall in the yen,” Tabei said.

As a result, many issues failed to sustain their gains stemming from improved earnings reports, he said.

Market participants also took a wait-and-see mood ahead of the submission Thursday of the Abe administration’s budget proposal for the fiscal year starting in April, Tabei noted.

Rising issues far outnumbered falling ones 1,211 to 539 in the first section, while 112 issues were unchanged.

Volume fell to 2.007 billion shares from 2.212 billion Friday.

The weaker yen pushed up export-oriented names, including automaker Toyota, tire-maker Bridgestone, air conditioner manufacturer Daikin and chipmaking equipment producer Tokyo Electron.

Telecommunications carrier NTT and farm machinery manufacturer Kubota surged after Nomura Securities revised up its stock price target on the companies, brokers said.

By contrast, Sony and Nikon were downbeat.

Olympus lost ground after the precious equipment-maker announced Friday that a U.S. unit is being investigated by the Department of Justice for a possible violation of the anti-kickback law.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average ended up 30 points at 17,690.

Nikkei Futures

nikkeifutures.org@imediaone.com

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