Nikkei seen supported by resource-linked shares

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to be supported on Friday after gaining nearly 2 percent the previous day, with a boost likely from resource-related shares due to strength in commodities prices.

Sentiment toward stocks also improved after the Nikkei managed to post strong gains on Thursday despite the yen’s advance to a fresh 15-year high on the dollar.

Still, investors will be careful about buying actively on rallies ahead of the weekend after Wall Street shares edged lower on Thursday, led by falls in bank shares.

“Basically, the Nikkei should move in a tight range today. It could be supported if Asian shares rally,” said Kazuhiro Takahashi, general manager at Daiwa Capital Markets.

“The Nikkei is not overly sensitive to the yen’s recent advance, yet we still have to watch the yen’s moves. For today, the chances of a big advance in stocks should be limited as U.S. shares fell slightly,” Takahashi said.

Strong commodities prices have had a positive effect on the Nikkei, traders said, boosting shares in the resource sector.

On Thursday, the Reuters-Jefferies CRB index, measuring 19 commodities, hit a two-year high at 301.83.

The benchmark Nikkei is expected to move in a range between 9,500 and 9,650, traders said.

Nikkei futures traded in Chicago closed at 9,585, slightly higher than the Osaka close of 9,570.

On Thursday, the Nikkei rose 1.9 percent, its best daily performance in a month, buoyed by a jump in resource stocks as dollar weakness fueled a climb in commodity prices.

The dollar edged higher to 81.48 yen in early Asian trade after it dropped to a 15-year low of 80.88 yen on EBS on Thursday despite wariness about Japanese intervention, and looked set to challenge its record low of 79.75 hit in April 1995.

Technical indicators showed the Nikkei is likely to find support at several areas, including the 25-day moving average, now at 9,446, while its next upward targets were at its recent peaks around 9,700, marked this month, and 9,800, hit in July.

($1=81.46 Yen)

(Reporting by Chikafumi Hodo; Editing by Edmund Klamann)

Nikkei seen supported by resource-linked shares