Monday, June 29, 2009

Nikkei Advance, Topix Set for Best Quarter in 21 Years

. Monday, June 29, 2009

By stockOzone team

Japanese stocks rose, sending the Topix index toward its biggest quarterly gain in more than two decades, after commodity prices climbed, the outlook for steel improved and the yen weakened.

Japan Petroleum Exploration Co., the nation’s second- biggest oil explorer, climbed 6.6 percent. Nippon Steel Corp., Japan’s largest maker of the alloy, added 2.8 percent after a government report said declines in steel output are expected to slow. Nissan Motor Co., which earns about a third of its sales in North America, gained 1.9 percent. Fujifilm Holdings Corp. and Nikon Corp. jumped after Mizuho Securities Co. raised their ratings to “strong buy.”

“With China’s and India’s economies remaining resilient, some investors believe demand for crude will balloon,” said Kiyoshi Ishigane, a senior strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $52 billion. “Governments are investing in infrastructure globally and a vast amount of alloy is needed.”

The Nikkei 225 Stock Average rose 188.27, or 1.9 percent, to 9,971.74 as of 12:40 p.m. in Tokyo. The broader Topix Index added 15.42, or 1.7 percent, to 930.74, with almost four stocks advancing for each that slid. The Nikkei briefly advanced above 10,000 for the first time since June 15.

Japanese stocks also got a boost from a statistics bureau report that household spending edged up 0.3 percent in May from a year earlier, marking the first gain in 15 months. Economists had estimated a 1.5 percent drop.

Quarterly Surge
The Topix has gained 20 percent this quarter, poised for its biggest three-month advance since the period ended March 1988, as economic indicators pointed to the easing of the global recession. Companies on the gauge traded at 43 times estimated net income, making Japanese equities more expensive than those in the U.S. and Europe, according to Bloomberg data.

Japan Petroleum surged 6.6 percent to 5,320 yen. Market leader Inpex Corp. rose 4.4 percent to 767,000 yen. Mitsubishi Corp., a trading company that gets more than half its sales from resources, added 1.6 percent to 1,787 yen.

Crude oil jumped 3.4 percent to $71.49 a barrel in New York yesterday, the highest settlement since June 12. Oil climbed as much as 2.2 percent today and is poised for a 47 percent quarterly leap, the most since 1990. Copper rose for a second session today.

Nippon Steel advanced 2.8 percent to 367 yen, and smaller rival JFE Holdings Inc. rose 2.5 percent to 3,260 yen. Production of crude steel will probably drop 29 percent in the three months to Sept. 30 from a year earlier, the Trade Ministry said yesterday. The estimate compares with a 39 percent tumble for this quarter.

Confidence in Dollar
Nissan, Japan’s No. 3 automaker, gained 1.9 percent to 589 yen, while bigger rival Toyota Motor Co. rose 2.8 percent to 3,670 yen. Sony Corp., maker of the Vaio personal computer, added 2 percent to 2,550 yen. Makers of cars and electronics contributed the most to the Topix’s advance.

The yen weakened against the dollar to as much as 96.31 from 95.44 at the close of stock trading in Tokyo yesterday. People’s Bank of China Governor Zhou Xiaochuan told reporters at a central bankers’ meeting in Switzerland that the country won’t change its currency reserve policy suddenly.

Zhou’s comment suggests “China has confidence in the authority of the dollar, which shores up credibility in the U.S. currency,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.

Fujifilm, the world’s biggest maker of film used in liquid- crystal-display panels, surged 6.8 percent to 3,060 yen, and camera maker Nikon jumped 6.7 percent to 1,678 yen. Mizuho lifted the stocks from “hold.”

Nikkei futures expiring in September advanced 1.5 percent to 9,970 in Osaka and increased 1.5 percent to 9,965 in Singapore.

Disclosure: Author does not own any of the stocks discussed here.

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