Nikkei set to advance towards 1-month high

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to advance toward one-month highs on Monday after the yen edged down against the dollar and due to firmness in U.S. shares reflecting unexpectedly strong jobs data.

The Tokyo market is seen likely to carry on its bullish trend set late last week when the Nikkei posted its best weekly performance in about a year, but some profit-taking and options-linked sales could emerge on rallies.

“Sentiment turned bullish after last week’s rally. Bullish U.S. jobs data is keeping U.S. shares at high levels, which is also helping to brightening the overall trend,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“Uncertainty over the global economy is receding and encouraging risk money to flow into global shares. Japanese stocks have more room to catch up as their performance has lagged behind others,” Nishi said.

Nikkei futures traded in Chicago closed at 9,710, up 0.6 percent from the Osaka close of 9,650.

The Nikkei (.N225: ) is expected to move in a range of 9,600 to 9,800 on Monday, traders said.

The Nikkei jumped 2.9 percent on Friday, gaining 267.21 points to 9,625.99, its highest close since October 7 and its best daily performance since June. It also booked its best week in a year.

Traders said the yen’s fall on the dollar should induce flows into exporters’ shares.

In early Monday Asian trade the yen was little changed at 81.27 against the dollar from Friday but was more than a yen lower than the 15-year high of 80.21 yen reached last week.

On Friday, U.S. stocks (Read more about the stock market today. ) rose for the fifth straight week as investors took heart from Republican gains in midterm elections and on news that more cheap money from the Federal Reserve was on the way.

U.S. non-farm payrolls rose a solid 151,000 in October, the first gain since May and more than double economists’ expectations.

The Nikkei could advance above 9,700, an intraday high hit last month, and then toward 9,800, a July peak, in the near term, but the market could face technical resistance and options-related selling should it rise around these levels.

The technical trend brightened after the Nikkei broke through its 25-day moving average of 9,430 and its 24-week moving average of 9,490 last week.

“The market has seen the Nikkei being put under pressure when it was around 9,700 in June and July. Market players remember this so the Nikkei should face strong resistance above 9,700,” said a trader at a Japanese securities house.

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STOCKS TO WATCH

— Toyota Motor Corp

Toyota cautiously nudged up its profit forecast, underscoring how vulnerable Japan’s biggest company is to the firm yen and a tepid sales recovery that are weighing on its shares.

— Sanyo Electric

Sanyo has several contracts with global carmakers to supply lithium ion batteries for plug-in hybrid and electric vehicles, and will begin shipping them between January and March 2012.

— Japan Petroleum Exploration

JAPEX may invest around 60 billion yen ($738.4 million) on the Hangingstone oil sand expansion project in Canada for which it is seeking government approval, a company executive said.

(Reporting by Chikafumi Hodo; Editing by Michael Watson)

Nikkei set to advance towards 1-month high