Nikkei rises 1.9 percent as resource stocks jump

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.9 percent on Thursday, its best daily performance in a month, buoyed by a jump in resource stocks as dollar weakness fueled a climb in commodity prices.

The market took in stride the yen’s rise to a fresh 15-year high against the dollar, as some analysts said markets seemed to have already priced in quantitative easing by the Federal Reserve early next month and the dollar’s broad decline may soon run its course.

Robust earnings results from U.S. heavyweights such as JPMorgan Chase & Co (JPM.N: ) and Intel Corp (INTC.O: ) bolstered investor confidence and helped to spur short-covering, analysts said, with some also citing large lots of Nikkei futures buying.

“The yen’s uptrend will likely continue, but market participants appear to be already beginning to factor in the possibility of a rebound in the dollar after the Fed launches quantitative easing as expected,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.

“The market also seems to have grown somewhat used to dollar/yen trading at 81 yen,” he added.

“Rather than intervention, what is supporting stock prices are expectations that the Bank of Japan may expand its easing policy going into the year-end, including asset purchases, pushed by further strength in the yen.”

The benchmark Nikkei (.N225: ) ended up 180.00 points at 9,583.51. The 1.9 percent rise was its biggest daily percentage gain since September 15.

The broader Topix (.TOPX: ) rose 1.7 percent to 836.95.

In Asian currency trade, the dollar hit a fresh 15-year low of 81.14 yen although caution remained that Japanese authorities could intervene the closer the greenback gets to its record low of 79.75 yen.

DOUBLE-EDGED SWORD

While dollar weakness has weighed heavily on stocks in recent weeks, fuelling worries about earnings and competitiveness in the key export sector, on Thursday it proved a double-edged sword by boosting global commodity prices and lifting resource shares.

“Expectations of further easing by the United States have led to dollar weakness and thus to a rally in commodities. A so-called risk-taking money flow is emerging in the market,” said Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets.

“The market also welcomed U.S. earnings that haven’t been as poor as feared.”

On the charts, the Nikkei’s next upward targets stand near recent peaks: the first around 9,700 marked this month, and then near 9,800 hit in July.

Strong support lies at the 38.2 percent retracement of its September-October rally and its 55-day moving average, both around 9,365.

Resource-related stocks were powered higher by a bull run for commodities, with copper hitting a 27-month high and gold returning to record peaks.

Mitsui Mining and Smelting (5706.T: ) advanced 4.5 percent to 257 yen and Sumitomo Metal Mining (5713.T: ) rose 4.1 percent to 1,454 yen. JX Holdings (5020.T: ), which owns Japan’s top copper smelter Pan Pacific Copper, climbed 5.2 percent to 486 yen.

Japan’s top oil explorer Inpex Corp (1605.T: ) rose 4.1 percent to 454,500 yen as oil approached a five-month high.

Yahoo Japan Corp (4689.T: ) shot up 6.4 percent to 30,600 yen after a source with knowledge of the matter told Reuters that several private equity firms had approached Internet and media companies including News Corp (NWSA.O: ) and AOL Inc (AOL.N: ) to gauge their interest in buying out Yahoo Inc (YHOO.O: ).

Alps Electric Co (6770.T: ) rose 4.9 percent to 745 yen after the Nikkei business daily said the electronic parts maker was set to report more than 20 billion yen in operating profit for the half year to September, recovering from a 17 billion yen loss in the same period last year.

About 2.18 billion shares changed hands on the Tokyo exchange’s first section, down from a five-month high of 2.88 billion booked last Wednesday.

Advancing stocks outnumbered decliners by 3 to 1.

(Editing by Edmund Klamann)

Nikkei rises 1.9 percent as resource stocks jump