Nikkei bounces 1.2% as exporters gain on renewed yen weakness

 

Japan's Nikkei share average rose on Wednesday, recouping some of the recent sharp losses, helped by demand for exporters as the yen resumed its recent weakening trend after U.S. stocks and gold prices rebounded.

 

The Nikkei closed up 1.2% at 13,382.89, after declining 2.4% over the past three sessions. It now stands 1.4% below a nearly five-year high of 13,568.25 tapped last week.

 

"After seeing a pull-back, there was an opportunity for buying on the dips," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

 

The dollar was last traded at 98.28 yen, having bounced off from a near two-week low of 95.67. It was still down 1.7% from a four-year high of 99.95 yen set last week.

 

Wall Street's more than 1% gain on an improved outlook for corporate earnings and expectations of continuing monetary stimulus also helped bolster sentiment.

 

Gold prices jumped after its record daily drop in dollar terms on Monday.

 

"Retail investors and short-term speculative investors are today's buyers. Yet, overall buying activity was relatively restrained," said Ryota Sakagami, chief equity strategist at SMBC Nikko Securities.

 

"Many investors, especially institutional investors, are now waiting for the upcoming G20 meeting for trading cues and refrained from making big moves," he said, referring to a meeting of finance ministers and central bankers from the Group of 20 leading economies to be held in Washington.

 

The broader Topix gained 1.5 % to 1,136.01, with 3.80 billion shares changing hands, the lowest in 10 sessions.

 

Volume has risen since the Bank of Japan (BOJ) announced a sweeping monetary easing campaign on April 4 and last week's daily average stood at 4.93 billion shares.

 

Among exporters, Mazda Motor Corp gained 5.9 %, Sony Corp added 2.3% and Komatsu Ltd <6301.T> advanced 1.7%.

 

Other notable gainers include IHI Corp <7013.T>, which jumped 5.7 % after the Nikkei newspaper reported that the company will start mass production of influenza vaccines as early as 2015 under a contract manufacturing arrangement with Astellas Pharma Inc.

 

Nomura Holdings Inc , however, fell 2.3% and was the second most-traded stock on the main board by turnover after Italian prosecutors ordered the seizure of 1.8 billion euros of assets from the brokerage's Italian unit as part of a fraud investigation.

 

The benchmark Nikkei has rallied more than 8% since the April 4 monetary expansion announced by the BOJ, which plans to inject $1.4 trillion into the world's third-largest economy in less than two years.

 

The index has risen more than 50% since Japanese prime minister Shinzo Abe called for aggressive monetary and fiscal expansionary policies last November.

 

During that period, both exporters and reflationary stocks such as real estate and banks have led the gains.

 

EARNINGS KEY

 

"For exporters, their earnings details will likely be scrutinized," when their results start filtering out later this month, said Makoto Kikuchi, the chief executive of Myojo Asset Management.

 

"Exporters have gained mainly on expectations for stronger forecasts, but investors will be also seeing if their core businesses have improved, not just weak-yen factors."

 

He prefers automakers to electronics, and said that if their earnings meet market expectations and the U.S. economy shows a steady recovery, the stocks have further upside.

 

Separately, Goldman Sachs on Tuesday published their "blue sky" scenario report on Japanese car makers and reiterated their 'buy' ratings on the Big Three - Nissan Motor Co Ltd , Toyota Motor Corp  and Honda Motor Co Ltd .

 

The brokerage also maintained their 'buy' rating on Suzuki Motor Corp , saying that "the stock appears to be lagging the sector," and sees a 32% upside for the major makers' stock prices from current levels.

 

The four stocks advanced between 1.8 and 3.3% on Wednesday.