Monday, September 28, 2009

Nikkei Rebounds 1 Pct On Exporters, Eyes On Yen

. Monday, September 28, 2009

By stockOzone team

Japan's Nikkei average rose 1 percent on Tuesday, with exporters such as Kyocera Corp (6971.T) rebounding after the yen pulled back from an eight-month high against the dollar.

The yen gave up some of its gains after Japanese finance minister Hirohisa Fujii appeared to backtrack on comments suggesting he was comfortable with the yen's recent strength.

The dollar recovered to around 90 yen after dropping to as low as 88.23 yen JPY= on Monday.

Many exporters have set rate assumptions around 90-95 yen.

"Dollar/yen moves have calmed down a bit, helping the market. But investors are increasingly taking a wait-and-see approach as moves in the currency market remain unstable," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

"The rebound is also likely to be limited because of growing worries about deflation. Deflation is not good for the stock market as it pressures corporate profits."

Data showed that Japanese core consumer prices fell a record 2.4 percent in August from a year earlier, as weak final demand adds to pressure from a slide in oil prices, raising questions about the Bank of Japan's view that deflation will not warrant more policy action. [ID:nT242643]

In light trade, the benchmark Nikkei .N225 gained 95.16 points to 10,104.68. The index slid 2.5 percent the previous day to mark its lowest close since July 24.

The broader Topix added 0.3 percent to 905.24.

Kobe Steel Ltd (5406.T) shot up more than 7 percent after the Nikkei business daily said the steel maker will boost production of copper strip products to 5,000 tonnes a month, restoring output to a peak hit in the spring of 2008.

U.S. stocks rallied on Monday to snap a three-day losing streak, as a spurt of corporate takeovers in the technology and health-care sectors fuelled optimism about share values. [.N]


The impact of a stronger yen on earnings of exporter companies is a concern for market players as a stronger Japanese currency eats into exporters' profits when they are repatriated.

Electronics parts maker Kyocera advanced 2.4 percent to 8,270 yen and industrial robot maker Fanuc Ltd (6954.T) gained 2.8 percent to 7,990 yen.

Honda Motor Co (7267.T) added 1.9 percent to 2,725 yen.

Kobe Steel jumped 7.3 percent to 162 yen.

Among other notable stocks, nonferrous metal manufacturer Dowa Holdings Co Ltd (5714.T) climbed 5.5 percent to 556 yen after Mitsubishi UFJ Securities initiated coverage of the company's shares with a target price of 690 yen.

"We think the company's business strategy -- which aims to transform Dowa from a conventional nonferrous metals company into a recycling-oriented company -- gives it substantial potential for longer-term growth," Mitsubishi UFJ Securities analyst Akihiro Omura said in a research note issued the previous day.

Shares of Weathernews Inc (4825.T) slumped 11.9 percent to 1,401 yen after the provider of meteorological information reported a 40 percent year-on-year fall in net profit for the June-August quarter on a 9 percent drop in revenues. [ID:nT2888P68I]

Some 875 million shares changed hands on the Tokyo exchange's first section, below last week's morning average of 1 billion.

Declining stocks outnumbered advancing ones, 903 to 624.

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

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