Nikkei climbs 1.4 percent; Dai-ichi Life gains in debut

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.4 percent to close at an 18-month high for a third straight day, buoyed after the yen hit a three-month low against the dollar and resource shares rose on gains in commodity prices.

A survey showing improvement in Japanese business confidence as well as a strong debut by Dai-ichi Life Insurance (8750.T: ), which opened 14 percent above the price in its $11 billion IPO, also boosted market sentiment.

“The weaker yen is a big help,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But the market is definitely overbought, and it really needs a bit of consolidation. This is going to leave it vulnerable to profit-taking.”

The benchmark Nikkei (.N225: ) gained 154.46 points to 11,244.40, although it earlier rose as far as 11,272.73.

The Nikkei’s relative strength index (RSI) shows the benchmark has crossed over the key 70 line, above which it is considered overbought. But longer-term direction indicators such as MACD and the daily Ichimoku chart suggest the Nikkei’s uptrend still has a while to run.

The Nikkei’s next major upside target lies near 11,310. That would be roughly a 38.2 percent retracement of the drop from a peak in 2007 to a trough in 2008.

The broader Topix (.TOPX: ) rose 0.7 percent to 985.26.

Dai-ichi, whose debut was the world’s largest in two years, opened at 160,000 yen. Trade was halted immediately after the first price was settled, a special measure taken by the Tokyo bourse to make sure the listing went smoothly. The shares will trade normally on Friday.

“The shares opened up 14 percent at 160,000 yen so everyone made a profit. I think this is positive for investor sentiment,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

The dollar was up 0.1 percent against the yen at 93.52 after hitting a three-month peak at 93.65 yen.

The euro was flat against the yen at 126.21 yen, after earlier climbing to a high of 126.62 yen, with some analysts saying the euro’s rebound as worries about Greece subside was also a major factor contributing to recent gains in the Tokyo stock market.

GOOD MORALE

The Bank of Japan’s tankan survey showed that Japanese business morale improved in March for the fourth consecutive quarter, a result broadly in line with market expectations.

The headline index for big manufacturers’ sentiment improved to minus 14 in March from minus 25 in December, compared with the median market estimate for minus 13 in March.

The tankan also showed that large manufacturers were forecasting recurring profits to climb 49.3 percent year-on-year in the financial year that started on Thursday, another result that was in line with expectations.

Market players said that hopes for the new quarter and business year were supporting buying, though wariness remained.

“We saw the Nikkei make strong gains in March, when it rose 10 percent, but trading volume was thin, so it’s not as bullish a situation as it could have been,” said Daiwa SB’s Ogawa.

Pump maker Ebara Corp (6361.T: ) jumped 5.0 percent to 501 yen in active trade after Deutsche Securities upgraded the shares to “buy” from “hold” and raised their target price to 600 yen from 300 yen, saying the visibility for future earnings has improved.

Yahoo Japan (4689.T: ) gained 2.9 percent to 35,050 yen after the company said it is in talks with China’s Taobao to link their Internet shopping sites, seeking access to the rapidly growing Chinese online retail market.

But banking group Resona Holdings (8308.T: ) fell 1.8 percent to 1,161 yen after Credit Suisse downgraded it to “neutral” from “outperform,” saying lower income expectations would limit the upside.

Volume picked up, with 2.4 billion shares changing hands on the Tokyo exchange’s first section, the strongest in three weeks.

Advancing shares beat declining ones, 947 to 576.

Money

(Additional reporting by Masayuki Kitano; Editing by Edwina Gibbs)

Nikkei climbs 1.4 percent; Dai-ichi Life gains in debut