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Nikkei ends at four-week high

Nikkei ends at four-week high
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First Published: Thu, Jul 24 2008. 12 40 PM IST
Updated: Thu, Jul 24 2008. 12 40 PM IST
By Aiko Hayashi / Reuters
Tokyo: Japan’s Nikkei average rose 2.2% on Thursday to a four-week closing high, as Toyota Motor Corp and other carmakers led gains by exporters on a softer yen versus the dollar and a drop in oil prices.
Toray Industries and Mitsubishi Rayon surged on plans to work with other firms to develop a new carbon fibre material for cars which would lighten vehicles for better fuel efficiency.
Sentiment improved as a weaker yen and a slide in oil prices to a six-week low overnight eased some concerns about corporate earnings, and on hopes for a rescue plan for mortage US finance companies Fannie Mae and Freddie Mac.
But further gains may be limited ahead of Japanese corporate earnings which kick off next week.
“There are fewer reasons to sell, but investors still can’t buy aggressively as concerns about US financials haven’t been completely wiped away and investors want to see how first quarter earnings turn out,” said Naoki Koga, senior fund manager at Toyota Asset Management.
“Japanese corporate earnings probably won’t be horrible because of a weakening yen, but they won’t be good, either,” he said.
The benchmark Nikkei average added 290.38 points to end at 13,603.31, above its 25-day moving average and its highest finish since 26 June. The broader Topix climbed 2.2% to 1,332.57.
Exporters gain
Katsuhiko Kodama, senior strategist at Toyo Securities, said investors were closely watching earnings by global companies such as Canon Inc.
“The market is nervous about the level of profit falls, and if those concerns are allayed, the market could aim for further gains,” he said.
Canon climbed 3.7% to 5,360 yen before it reported after the close a 12% fall in quarterly operating profit, hit by weaker monochrome copier demand and a firmer yen versus the dollar.
But the camera and office equipment maker stuck to its full-year outlook that exceeds market expectations.
The dollar hovered near a one-month high against the yen, trading around 107.78 yen Investors had fretted over a stronger yen as it curbs exporters’ overseas profits when they are brought back home.
Toyota jumped 5.1% to 5,120 yen, while Honda Motor Co gained 3.8% to 3,840 yen and Nissan Motor Co. added 1.2% to 842 yen.
Mazda Motor Corp shot up 6.5% to 660 yen after Merrill Lynch and Lehman Brothers raised their target prices for the stock.
Lehman analyst Tsuyoshi Mochimaru said he expected the carmaker’s first-quarter results, due out next week, to be stronger than expected on sales growth overseas for the Mazda2 and Mazda6 models.
Toray Industries jumped 4.8% to 589 yen and Mitsubishi Rayon surged 8% to 366 yen.
However, oil and gas developer Inpex Holdings Inc skidded 4.3% to 1.06 million yen on the drop in oil prices.
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First Published: Thu, Jul 24 2008. 12 40 PM IST
More Topics: Markets | Japan | Stocks | Nikkei | Topix |