Nikkei rebounds as chip shares rise; Elpida climbs

By Masayuki Kitano

TOKYO (BestGrowthStock) – Japan’s Nikkei average climbed 1.7 percent on Wednesday, with chip-related shares such as Toshiba Corp (6502.T: ) gaining after Apple’s results beat expectations and its shares shot to a lifetime high.

Other solid U.S. corporate earnings fed optimism about an economic recovery, with the yen’s retreat against the dollar the previous day offering support to exporters.

Toshiba Corp (6502.T: ), the supplier of NAND-type flash memory chips for Apple’s iPhone, climbed 2.9 percent to 527 yen.

Memory chip maker Elpida Memory Inc (6665.T: ) rose 4 percent to 2,091 yen after saying it likely posted a net profit of 2 billion yen ($21.5 million), beating analysts’ expectations for a loss.

Buying by overseas players including European investors gave a lift to Tokyo shares and helped the Nikkei claw above resistance at 11,068, its 25-day moving average, traders said.

But market players said it was too early to tell whether Wednesday’s rise signifies the end of a pullback that began in early April, after the Nikkei hit an 18-month high.

“It is hard to say how long the correction may last or how deep it may turn out to be,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

“Market participants seem to be mostly engaged in short-term trading, and are probably looking to sell again if something happens,” Akino said.

Although the Nikkei edged above resistance at its 25-day moving average, technical indicator MACD remains bearish.

The Nikkei (.N225: ) logged its biggest one-day percentage gain in more than a month and closed up 189.37 points at 11,090.05.

Trading volume was moderate, with 2.2 billion shares changing hands on the Tokyo exchange’s first section.

That was up from a two-week low of 1.95 billion shares hit on Tuesday, but remained below a one-month high of 2.39 billion shares reached in early April.

The broader Topix index rose 1.5 percent (.TOPX: ) to 987.07.

European investors were seen buying blue-chip shares and domestic-demand related shares, said Hiroaki Kuramochi, chief equity marketing officer for Tokai Tokyo Securities.

“There has been some buying by European investors and that is providing reassurance to the market,” he said.

After badly underperforming other Asian stock markets (.MIAPJ0000PUS: ) in 2009, the Nikkei has outperformed this year, helped by buying by foreign investors who had been underweight Japanese equities.

JFE MISSES RALLY

Among decliners, JFE Holdings Inc (5411.T: ) slipped 0.7 percent to 3,460 yen. The world’s No.6 steelmaker said during afternoon trade that its quarterly profit more than tripled on strong exports to Asia, but it gave no annual forecast amid uncertainty over materials costs.

“The business environment is not bad for steelmakers this year, though I guess they cannot give an optimistic view ahead of negotiations with their clients,” said Takeshi Osawa, a senior fund manager at Norinchukin Zenkyoren Asset Management.

“The point to watch is how much the steelmakers can pass on increases in raw materials costs.”

All Nippon Airways Co (9202.T: ) climbed 3.8 percent to 302 yen after Bank of America Merrill Lynch lifted ANA’s rating by two notches to “buy” from “underperform.”

In a report obtained by Reuters, the brokerage firm also raised ANA’s share price target to 380 yen from 200 yen, citing an expected recovery in global airline demand and the carrier’s stronger competitive position on prices in the international air freight industry.

ANA’s rise also came as Europe’s skies were opened for business on Wednesday, after airlines had seen their flights to Europe and elsewhere idle for more than five days due to volcanic ash that spread from Iceland.

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(Additional reporting by Yuko Inoue and Elaine Lies; Editing by Chris Gallagher)

Nikkei rebounds as chip shares rise; Elpida climbs