Nikkei rises on upbeat Japan capex data

Updated - January 12, 2018 at 02:01 PM.

The Ministry of Finance data showed capital expenditure by manufacturers and non-manufacturers grew 1 % and 6.3% respectively

The Nikkei was up 1 per cent at 19,854.27 at midday. File Photo

Japan's Nikkei share average started the month with gains on Thursday, buoyed by upbeat news of Japanese companies' growing capital expenditure as well as the dollar's ascent from overnight lows against the yen.

The Nikkei was up 1 per cent at 19,854.27 at midday, pushing toward the key resistance line of 20,000 points.

“I still think 20,000 is on the horizon sometime this year, and it's just going to come down to the US uncertainties," said Gavin Parry, managing director of Parry International Trading in Hong Kong.

“The Japan Inc. earnings story is good - were actually decent - and outlooks were rosy,” he said, noting dollar/yen levels had moved up from the level at which some of the outlooks were calculated.

News out early on Thursday showing that companies picked up the pace of their investment in plant and equipment in the January-March quarter brightened sentiment toward corporate Japan.

The Ministry of Finance data showed capital expenditure by manufacturers and non-manufacturers grew 1.0 per cent and 6.3 per cent respectively in the first quarter from a year earlier, and corporate profits rose 26.6 per cent.

The amount of recurring profits, at 20.1 trillion yen ($181.20 billion), was the biggest on record for a January-March quarter, driven by brisk demand for cars and smart phones, an MOF official said.

Japanese markets largely shrugged off a private survey that showed China's manufacturing activity unexpectedly contracted in May for the first time in 11 months.

The dollar steadied on Thursday, adding 0.2 per cent on the day to 110.96 yen after skidding to two-week lows against its the yen overnight, with this month's Federal Reserve meeting in focus.

San Francisco Fed President John C. Williams said on Thursday he sees three interest rate increases this year as his baseline scenario, but would view four rate increases as appropriate if the US economy were to get an unexpected boost.

Futures markets are pricing in a roughly 90 per cent chance the Federal Reserve will raise rates by 25 basis points this month, though some investors anxiously await this Friday's nonfarm payrolls report for continued evidence of labour market recovery.

A Reuters poll showed economists forecasting 185,000 new jobs in May.

Caution reigned on Wall Street on Wednesday, which some had believed might carry over into Asian trade. Major indexes edged slightly lower after financial heavyweights JPMorgan and Bank of America warned of revenue weakness.

“Many thought investors would remain quiet before the US employment stats were released, but the Tokyo market has rebounded and shows strength even with a slight upward movement of the yen,” said Hiroki Allen, chief representative of Superfund Japan in Tokyo.

Shares of beleaguered electronics giant Toshiba Corp skidded 2.1 per cent, after it moved some of the assets of its memory chip unit back to the parent company in a bid to ward off Western Digital Corp's legal claim that the Japanese conglomerate cannot sell the unit without the US partner's consent.

Canon Inc's shares were 3 percent higher, after the camera and printer manufacturer said it will buy back up to 1.3 per cent of its own shares worth 50 billion yen ($450.98 million).

Shares of Scroll Corp rose 4.1 per cent, after the internet retailer reported its acquisition of KINARI, a company dealing with organic cosmetics, from Shiseido Co, which gained 1.9 per cent.

Park24's shares slumped 6.1 per cent, after the parking lot operator reported a 10.2 per cent year-on-year drop in operating profit for the 6 months through April 2017, due to an increase in capital spending

The broader Topix added 1 per cent to 1,583.69, and the JPX-Nikkei Index 400 was 1.1 per cent higher at 14,123.55.

Published on June 1, 2017 04:12