Tokyo: Japan’s Nikkei stock average rose 0.9% buoyed by exporters such as Canon Inc on a softer yen, though property shares weighed due to fears about a future interest rate hike in the face of inflation.
Fuji Heavy Industries Ltd jumped more than 10% after Morgan Stanley raised its rating to “equal-weight” from “underweight,” saying this year’s earnings could beat its earlier forecasts by a wide margin on robust sales of Subaru.
“With a lack of trading factors, investors are returning to stocks on a softer yen,” said Masaru Hamasaki, senior strategist at Toyota Asset Management.
But he said potential rate hikes to curb inflation are on the minds of investors, capping further gains in the market.
“Japan doesn’t have core inflation yet, but we don’t know when that will happen. The government seems to be leaning toward preventing it before it happens, and the concern is that that will hurt the economic outlook and thus weigh on stocks.”
As of 0436 GMT, the benchmark Nikkei average added 119.21 points to 14,140.38 and the broader Topix gained 0.3% to 1,386.99.
The dollar stayed near a 3-1/2-month high of 107.47 yen hit earlier in the day after more Fed officials talked tough on inflation, boosting expectations for U.S. interest rates to rise this year.
Exporters powered higher as a softer yen can boost their profits when earnings from abroad are brought home.
Camera and office equipment maker Canon Inc gained 2.4% to 5,470 yen and Honda Motor Co added 2.2% to 3,780 yen.
Fuji Heavy Industries Ltd soared 10.7% to 591 yen.
Property firms slid amid concerns about future interest rate hikes as higher rates will boost their costs, said Hamasaki at Toyota Asset Management.
Mitsui Fudosan Co Ltd, Japan’s largest real estate developer, fell 2.1% to 2,330 yen and Mitsubishi Estate Co Ltd declined 1.2% to 2,555 yen.