Nikkei hits 7-week closing high; eyes on BOJ, Fed

By Aiko Hayashi

TOKYO (BestGrowthStock) – The Nikkei average inched up to a seven-week closing high on Monday, with some exporters climbing on a weaker yen, though profit-taking in recent gainers such as Advantest Corp (6857.T: ) tempered the market’s rise.

Investors were reluctant to trade actively after the benchmark rose nearly 4 percent last week and as they wait for monetary policy reviews both at home and in the United States later in the week.

BOJ sources, talking to media including Reuters, have said the board is considering expanding special money market operations, just as the yen strengthened toward a 14-year high against the dollar.

“There’s a strong sense of wait and see in the market ahead of the meetings at the BOJ and the Federal Reserve, making trade rather range-bound,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

“At current levels, there is more profit-taking pressure and little active buying, except for short-covering,” he said.

A meeting of EU finance ministers to discuss Greece’s financial problems will also take place this week.

The benchmark Nikkei (.N225: ) inched 0.72 point higher to 10,751.98, its highest close since January 21. It also hit a seven-week intraday high of 10,808.84 earlier on Monday.

The broader Topix (.TOPX: ) rose 0.3 percent to 938.91.

Some 1.9 billion shares changed hands on the Tokyo exchange’s first section, down from Friday’s seven-week high.

According to the Tokyo Stock Exchange, trading volume on Friday totaled 2.8 billion shares.

Daily Ichimoku charts, a form of technical analysis popular in Japan, indicate the Nikkei’s outlook could be bullish.

The index has broken above the Ichimoku cloud, the tenkan sen has crossed over the kijun sen to achieve a golden cross, and the chikou span has risen above the candlesticks. These bullish signals have appeared over the past few weeks.

Not all analysts were convinced that Tokyo shares are heading for a further rally, however.

Uncertainty about the outlook for investors’ risk appetite due to ongoing worries about fiscal problems in Greece and some other euro zone countries, could cloud the outlook for Tokyo shares, said Nagayuki Yamagishi, investment strategist at Mitsubishi UFJ Securities.

“The issues related to Greece may subside temporarily but the market has probably already factored in that possibility. I think caution is needed regarding the outlook,” Yamagishi said.

The Nikkei is already at levels where it may be considered overbought, with the benchmark’s relative strength index (RSI) having risen above 70.

Finance ministers from countries using the euro hope to agree on Monday on a way of providing heavily indebted Greece with financial aid, despite French doubts that a deal will be reached.

JVC JOLTED

Recent gainers succumbed to profit-taking, with chip equipment maker Advantest losing 0.9 percent to 2,195 yen and budget clothing chain operator Fast Retailing (9983.T: ) down 1.1 percent at 16,570 yen.

Electronics maker JVC Kenwood Holdings Inc (6632.T: ) slid 14 percent or 6 yen to 37 yen after restating its earnings over the past several years due to accounting problems at its unit Victor. It is also now estimating an operating loss of 9.0 billion yen for this financial year, greater that the 3.5 billion yen loss previously forecast.

But some exporters received support from a weaker yen, which boosts their overseas profits when repatriated. The dollar held steady compared to late U.S. trading on Friday at 90.58 yen. It rose above 91 yen for the first time since late February on Friday. (FRX/: )

Canon Inc (7751.T: ) jumped 3 percent to 4,165 yen and Konica Minolta (4902.T: ) climbed 2.7 percent to 1,017 yen.

Toyota Motor Corp (7203.T: ) rose 0.9 percent to 3,505 yen, despite news that a Southern California prosecutor filed the first consumer protection lawsuit against the automaker, claiming it had engaged in “fraud” by hiding evidence of dangerous vehicle defects.

Shipping firms climbed after the Baltic Exchange’s main sea freight index (.BADI: ) rose 5.7 percent to a two-month high on Friday. Fresh Chinese demand for iron ore helped buoy the index, which tracks rates to ship dry commodities.

Nippon Yusen (9101.T: ) climbed 2.6 percent to 354 yen and Kawasaki Kisen K.K. (9107.T: ) advanced 2.3 percent to 356 yen.

Advancing stocks outnumbered declining ones, 933 to 573.

Investment Analysis

 (Additional reporting by Masayuki Kitano; Editing by Joseph Radford)

Nikkei hits 7-week closing high; eyes on BOJ, Fed