Japanese stocks rose on Thursday morning with all sub-sectors up after gains in US and European shares and a rebound in oil prices eased investor jitters.
The Nikkei rose 1.8 per cent to 17,187.02 by mid-morning, after adding 0.01 per cent on Wednesday, just managing to snap a four-day losing streak.
Wall Street was supported after strong private sector US jobs data and as minutes from the last Federal Reserve meeting reassured investors the central bank was in no hurry to start raising interest rates.
European shares rallied on reports of deflation for the euro zone, which had investors speculating that the European Central Bank will enhance its stimulus programme.
Oil prices bounced back, snapping a four-day losing streak.
“Sentiment is supported by such overseas developments and investor concerns are eased for now,’’ said Toshihiko Matsuno, chief strategist at SMBC Friend Securities.
Earnings season
He said Thursday’s gains are seen as a technical rebound, but the Japanese market is expected to start seeing solid gains as companies start reporting October-December earnings.
“Exporters as well as companies that benefit from inbound demand will likely lead gains in the market starting at the end of the month,’’ he said.
In the longer-term, analysts expect companies to post strong full-year earnings, and Daiwa Securities forecasts Japanese companies to post a 9.7 per cent rise in their pre-tax profits for the year ending March compared to the previous one.
Forex rate
According to Daiwa senior strategist Makoto Morita, the forecast is conservative as it is based on a foreign exchange rate at 110 yen against the dollar, and the forecast will likely be revised.
“A double-digit gain is possible this fiscal year,’’ Morita said, adding that if the yen weakens by 10 yen against the dollar, it will push pre-tax profits up by 3 per cent.
Exporters in demand
On Thursday, exporters were in demand as the dollar climbed back above 119.00 yen, pulling away from a three-week trough of 118.36 plumbed on Tuesday.
Toyota Motor Corp rose 1.8 per cent, Honda Motor Co added 1.8 per cent and Advantest Corp gained 2.2 per cent.
McDonald’s Japan slipped 2.0 per cent to an 11-month low in heavy trade after it apologised to customers after objects, including a tooth and plastic, were found in its food.
The broader Topix added 1.2 per cent to 1,375.96, with all 33 of its subsectors rising. The JPX-Nikkei Index 400 gained 1.3 per cent to 12,465.45.