Nikkei up 1 percent as banks gain; technicals help

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1 percent on Monday after more upbeat data helped sooth investor worries that U.S. economic growth would slow, with technical charts also pointing to further gains for the index.

Banks including Japan’s top lender Mitsubishi UFJ Financial Group (8306.T: ) climbed after a decision by global regulators and central bankers that banks will have to triple to 7 percent the amount of top quality capital.

Markets were reassured that banks would have enough time to comply, with transition periods in some cases extending to January 2019 or later.

“Investors welcomed that this event has run its course without a hitch after the Basel decision came within expectations, and that that sentiment is also spreading to the currency market, with the euro higher,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

The benchmark Nikkei (.N225: ) gained 92.05 points to 9,331.22. It rose 1.6 percent on Friday to 9,239.17, pulling away from a 16-month low of 8,796.45 hit on September 1 and climbed 1.4 percent on the week.

The broader Topix (.TOPX: ) added 0.6 percent to 838.62.

In early Asia trade, the dollar traded at 84.17 yen, after hitting a 15-year low of 83.34 yen last week. The euro rose to $1.2781, and gained 0.6 percent to 107.56 yen.

In an encouraging technical sign for the Nikkei, its 5-day moving average edged above its 25-day moving average, forming a “Golden Cross” that can often indicate further rises and is regarded as a buying signal.

Its MACD has also headed upward after a bullish cross this month, suggesting more upward momentum.

The Nikkei next faces resistance at the bottom of the Nikkei’s Ichimoku cloud, which lies around 9,530. Ichimoku charts are popular with Japanese traders.

Moves in Chinese stocks were also in focus after data at the weekend showed an uptick in inflation to 3.5 percent in the year to August from 3.3 percent in July, market players said, though the figure was in line with expectations.

Shanghai stocks (.SSEC: ) were up 0.2 percent in early trade.

A gradual improvement in economic data continued as U.S. wholesale inventories surged by the largest amount in two years in July, helping U.S. stocks (Read more about the stock market today. ) inch up on Friday, with the Dow and S&P 500 closing the week with their seventh gain in eight sessions.

Among banks in Tokyo, Mitsubishi UFJ Financial Group rose 2.2 percent to 412 yen and Mizuho Financial Group (8411.T: ) gained 1.5 percent to 132 yen. They were the most actively traded stocks on the main board by volume.

Sumitomo Mitsui Financial Group (8316.T: ) climbed 1.9 percent to 2,587 yen.

Exporters also gained, with Tokyo Electron Ltd (8035.T: ) advancing 2.9 percent to 4,270 yen and Honda Motor Co (7267.T: ) adding 1.9 percent to 2,838 yen.

Mitsui Fudosan (8801.T: ) rose 1.7 percent to 1,365 yen after the Nikkei business daily said the real estate developer will open large commercial complexes like shopping centres in China as early as 2013.

(Editing by Edwina Gibbs)

Nikkei up 1 percent as banks gain; technicals help