Nikkei set to build on gains; resource stocks seen up

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to climb on Friday after Wall Street stocks scored two-year closing highs and commodity markets rallied a day after the Federal Reserve unveiled a plan to boost the economy.

Japanese stocks will likely extend gains, helped by short-covering in exporters and gains in resource-linked shares, although they may later lose steam as the Nikkei already rallied the day before and as investors await the outcome of a Bank of Japan policy meeting due later in the day, analysts said.

Nikkei futures traded in Chicago closed at 9,485, up 1.3 percent from the Osaka close. The Nikkei (.N225: ) rose 2.2 percent on Thursday, booking its biggest daily percentage gain in more than a month.

Resona Holdings (8308.T: ) will be in focus after three sources familiar with the matter said the Japanese bank plans to raise about $6.2 billion in its first public stock offering since it was effectively nationalized in 2003.

“Markets are now supported by liquidity in the system, sending U.S. stocks (Read more about the stock market today. ) sharply higher. Although Japanese stocks already rallied yesterday, the Nikkei may climb above 9,400, near its 5-week moving average,” said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

“But with the outcome of the BOJ’s meeting expected later today and the yen being a bit stronger, if the yen advances further after the BOJ news, the Nikkei could pare gains and move in a range, eyeing the U.S. jobs data release.”

The Fed on Wednesday said it would spend $600 billion buying longer-term Treasury bonds through the end of next June as part of a renewed quantitative easing program. Stocks in general benefit because of the impact of a huge wave of liquidity flowing into the financial system.

The Bank of Japan is expected to hold off with new policy steps on Friday when it ends its two-day meeting.

Japan’s central bank has announced its own, more modest 5-trillion yen ($62 billion) asset buying plan last month and brought forward its policy review from mid-November to get the scheme under way as soon as possible.

The benchmark Nikkei (.N225: ) is likely to move between 9,300 and 9,500, market players said. It ended the previous day at 9,358.78, posting its best daily performance since September 15, when the index climbed 2.3 percent after Japanese authorities intervened in the currency market for the first time in six years.

Analysts expect resistance for the Nikkei to stand around its 5-week moving average, now at 9,415, and then 9,500, near its 26-week moving average, which has contained the benchmark for more than five months.

In early Asia trade, the dollar traded at 80.75 yen, not far from its all-time low of 79.95 yen.

The U.S. Standard & Poor’s 500 Index (.SPX: ) gained 1.9 percent to 1,221.06, its highest level since September 2008. (.N: )

Energy and commodity prices also gained, with gold touching record highs as markets concluded the Fed’s move to increase the supply of dollars would likely weigh the currency further. But it also benefits dollar-priced commodities, as it cuts their cost for other currency holders.

(Reporting by Aiko Hayashi; Editing by Joseph Radford)

Nikkei set to build on gains; resource stocks seen up