Nikkei gains on strong Wall Street; large-cap shares advance

Reuters Tokyo | Updated on March 12, 2018 Published on December 29, 2014

Japanese stocks advanced on Monday as further gains on Wall Street boosted the appetite for riskier assets and buoyed investors’ confidence in the outlook for equities in 2015.

The Nikkei benchmark gained 0.4 per cent to 17,892.82 points by 0130 GMT.

In a holiday-shortened Christmas week, both the Dow and the S&P 500 closed at record highs in a broad rally.

Recent gains have come on the back of promising economic data that has lifted the expectations of sustainable growth in the world’s largest economy. That’s likely to be a big plus for Japanese firms, many of whom export heavily to the US market.

Corporate tax cut

And with Japan’s Economics Minister Akira Amari calling for a corporate tax cut of at least 2.5 per cent after April, corporate earnings are likely to rise in 2015, helping the market to shrug off lingering concerns about Japan’s tattered finances and weak domestic demand.

“Japan Inc is the next catalyst,’’ said Gavin Parry, managing director of Parry International Trading.

“Earnings in 2015 will be very good.’’

Investors received a further boost as a Reuters survey showed that top Japanese firms are planning to use their record ¥233 trillion ($1.9 trillion) cash reserves to boost shareholder returns in 2015 rather than spend it on wage increases.

Large-cap, exporters’ shares

In quiet trade, investors bought large-cap shares, with Uniqlo clothes brand owner Fast Retailing Co Ltd gaining 0.9 per cent and accounting for over a quarter of the Nikkei’s net point gains. Mobile phone carrier Softbank Corp added 0.4 per cent and KDDI Corp ticked up 0.3 per cent.

With the yen languishing at 120.50, within sight of a 7-1/2 year low of 121.86 plumbed this month, investors also bought exporters shares. Panasonic Corp and Toyota Motor Corp advanced 0.4 per cent and 0.5 per cent, respectively.

Prime Minister Shinzo Abe’s mix of aggressive monetary and fiscal stimulus has pushed the Japanese currency down by roughly a third since late 2012, helping to boost exporters’ profits and making Japanese goods more competitive overseas, but adding to some firms’ import bills.

Market participants see the trend continuing in 2015. “The yen is really losing its shine as a risk-averse currency,’’ said Parry.

The broader Topix added 0.2 per cent to 1,430.02, while the JPX-Nikkei Index 400 ticked up 0.1 per cent to 12,977.65. ($1 = 120.4900 yen)

Published on December 29, 2014
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