Japan Stocks Gain on Earnings Optimism Even as Yen Strengthens

  • Nikkei rises to within 2 points of 20,000, to 18-month high
  • Buying interest for Japan equities ‘seems pretty strong’: Mito

Baring's Do Says Profit Recovery Important to Markets

Japanese equities rose for the first time in three days as investors remained positive on the corporate earnings outlook even as the yen reversed its decline against the dollar.

Telecommunication stocks contributed most to the Topix index’s gain as Nippon Telegraph & Telephone Corp. rose after announcing plans to raise its dividend this fiscal year. The Nikkei 225 Stock Average flirted with 20,000, rising to 19,998.49, the highest since December 2015, before pulling back when the yen reversed its slide against the dollar after reports that U.S. President Donald Trump disclosed classified information to Russian officials.

“Buying interest for Japanese equities seems pretty strong, with the overseas environment including the U.S. stock market looking good, while local corporate earnings are providing relief,” said Hajime Sakai, chief fund manager at Mito Securities Co. in Tokyo.  “Foreign investors have been picking up local equities little by little since last month. Whether their buying accelerates, or not, beyond the 20,000 mark for the Nikkei 225 will be a focal point.”

Jefferies Inc. maintains its bullish opinion on Japan stocks, based on better loan growth, higher wage demands and improving global trade, according to a May 15 note.

Summary

  • Topix +0.3% to 1,584.23 at the close in Tokyo
  • Nikkei 225 +0.3% to 19,919.82
  • Yen +0.3% at 113.49 per dollar after weakening 0.4% Monday
  • Nisshinbo -5% after announcing a plan to buy out Japan Radio in a stock deal
  • NTT +2.3% as analysts see dividend increase as positive for shares
  • Trend Micro +2.2%; software developer gains after the latest reports on recent cyber attacks
  • Japan Steel Works -7.5% to 12-year low as orders decline
  • Toshiba -12%; continues decline after it was cut to neutral from outperform at Macquarie; Japan trade minister says govt won’t interfere in co.’s dispute with Western Digital

— With assistance by Nao Sano, and Tom Redmond

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