Nikkei rises to break above resistance, copiers up

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average jumped 2.3 percent on Monday, breaking above resistance at the level of its 25-day moving average, as worries about Greece receded and companies such as copier and printer firms benefited after strong earnings from U.S. peers.

Monday’s rally marked the biggest daily percentage gain since late February and saw the Nikkei recoup last week’s 1.7 percent fall.

IHI Corp (7013.T: ) surged on news that it and Toshiba Corp (6502.T: ) were setting up a venture to produce key components for nuclear power plants while Toyota Motor Corp (7203.T: ) found support from a report that it is likely to post an annual operating profit slightly above consensus expectations.

Positive sentiment from Wall Street’s rise to a 19-month high also helped but market players were reluctant to say the Nikkei was ready to resume an earlier uptrend that saw it hit an 18-month intraday high of 11,408.17 in early April.

“There does seem to be a lessening in risk aversion after Wall Street’s performance on Friday, but whether this is sustainable remains to be seen,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

“It appears that Greece is getting aid, but whether this is the ultimate solution is a big question. Also, investors may be reluctant to buy the Nikkei much ahead of results later this week.”

The benchmark Nikkei (.N225: ) rose 251.33 points to 11,165.79, breaking above resistance at the level of its 25-day moving average, currently around 11,090, after being stuck below it since last Wednesday.

While indicators such as MACD remain bearish, with the MACD line still below the signal line, it has stopped falling and appears poised to start heading higher. The Nikkei’s relative strength index (RSI) stands at 56 after falling as low as 45 last week. Anything from 30 and under indicates it is oversold.

The broader Topix (.TOPX: ) rose 1.9 percent to 996.71.

Yoshinori Nagano, a senior strategist at Daiwa Asset Management, said the stock market was expected to stay range-bound, with the Nikkei likely moving in a 10,500-11,500 range for the next month.

“Investors will pay more attention to individual stocks with good earnings rather than the performance of the overall market as the earnings announcement season is picking up pace.”

Exporters rose broadly after the yen weakened against the dollar, with the greenback up 0.3 percent to 94.23 yen. Investors fret about a stronger yen because it eats into exporter profits when repatriated.

EARNINGS ENTICE

Gaining on earnings hopes were Canon Inc (7751.T: ), Ricoh (7752.T: ) and Konica Minolta Holdings (4902.T: ) after U.S. rival Xerox Corp’s (XRX.N: ) results and outlook beat expectations on improving corporate demand for printing and document managing services [ID:nN23256153].

Canon advanced 3.5 percent to 4,395 yen, Ricoh gained 4.2 percent to 1,647 yen and Konica Minolta rose 4.6 percent to 1,168 yen.

Canon said after the bell that its quarterly profit jumped more than fourfold on brisk demand for cameras and printers, and the company brought its full-year outlook closer to market expectations.

Toyota climbed 3.4 percent to 3,690 yen after the Nikkei business daily reported the automaker is expected to have posted an operating profit as high as 50 billion yen ($532.4 million) for the past financial year, above the 42.4 billion consensus from analysts polled by Thomson Reuters I/B/E/S. [ID:nTOE63N008]

Shin-Etsu Chemical Co Ltd (4063.T: ) rose 2.4 percent to 5,450 yen after the Nikkei said the world’s No.1 maker of silicon wafers used to make semiconductors will likely post a pretax profit of 36 billion yen for the January-March period, up 43 percent from the same period last year.

IHI soared 6.8 percent to 172 yen and Toshiba rose 2.4 percent to 545 yen.

Sumitomo Chemical (4005.T: ), a major comprehensive chemicals maker, surged 5.7 percent to 462 yen, extending gains after hiking its operating profit estimate for the business year just ended to 50 billion yen from 35 billion yen, citing the impact of cost cuts.

Volume was moderate on the Tokyo exchange’s first section, with 2.1 billion shares changing hands, in line with last week’s daily average but below the one-month high of 2.39 billion reached in early April.

Advancing shares outnumbered decliners by nearly 10 to 1. (Additional reporting by Rika Otsuka; Editing by Michael Watson)

Nikkei rises to break above resistance, copiers up