Tokyo: Japan’s Nikkei average rose more than 2% on Friday, 2 May, to a two-month high, buoyed by exporters such as Advantest Corp on a softer yen and a rally on Wall Street amid growing optimism about the US economy.
Property firm Sumitomo Realty & Development Co. shot up on media reports its profits were likely to beat forecasts. Other real estate stocks also rose on the back of strong earnings, helped by demand for office space in Tokyo.
Bank shares tracked gains in their US peers due to improved investor confidence a day after the Federal Reserve trimmed rates again and hinted at a pause in its recent campaign to lower borrowing costs.
On the negative side, Japan Tobacco Inc slid 6.1% to 480,000 yen after the world’s third-largest cigarette maker forecast a 28% fall in profit this year due to an accounting change, its first drop in eight years. This prompted Goldman Sachs to remove the stock from its “conviction buy list” and lowered the target price.
“Today’s market is buoyed by a rally in the US and a softer yen. But investors seem to have become too optimistic about the US economy recently as jobs data later today is still expected to be poor,” said Soichiro Monji, a chief strategist of the equity management department at Daiwa SB Investments.
“The Nikkei’s 14,000 looks to be the ceiling for now. If it goes above that level, stocks are overbought under the current conditions.”
Traders will scrutinize the US labour Department’s April employment report due 1230 GMT for more clues on how the US economy is fairing. Economists expect nonfarm payrolls to have shed 80,000 jobs, in line with losses in the three previous months.
After a one-day break on Tuesday, Japanese markets will be shut again next Monday and Tuesday for national holidays.
Softer yen helps exporters
As of 0443 GMT, the Nikkei average added 296.42 points or 2.2% to 14,063.28, the highest level since 27 February.
In April, the benchmark gained 10.6%, the biggest monthly percentage gain since July 1995, when it jumped 14.9%.
The broader TOPIX rose 2.3% to 1,376.70.
The three US major indexes closed at the highest level on Thursday since the first half of January as equities extended a rally started in mid-March on optimism that credit markets and the economy have begun to stabilise.
The dollar climbed 0.2% from US trade to 104.62 yen pushing back near a two-month high of 104.89 yen hit earlier in the week on trading platform EBS.
Japan’s high-tech shares gained after the tech-heavy Nasdaq Composite Index ended the day up 2.8%, helped by a jump in chip maker Intel Corp, a technology bellwether.
Shares of Advantest, the world’s largest maker of microchip testers, rose 4.9% to 2,920 yen and TDK Corp, an electronic components maker, climbed 3.1% to 7,020 yen.
Investors had fretted over a recent rise in the yen as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency.
Property shares gained, with Sumitomo Realty one of the top boosters of the Nikkei 225. The Nikkei business daily reported the country’s third-ranked property developer has likely beaten its 2007/08 profit forecast, helped by brisk office leasing business.
Rival property firms Mitsui Fudosan and Mitsubishi Estate also posted rises in quarterly profit on tight supply of prime office space in Tokyo this week.
Sumitomo Realty climbed 7% to 2,680 yen, Mitsui Fudosan jumped 5.4% to 2,725 yen and Mitsubishi Estate advanced 4.7% to 3,000 yen.