Nikkei rallies, supported by exporters as weaker yen boosts sentiment

Tokyo — Japan’s Nikkei rose to a three-and-a-half-week high in choppy trade on Tuesday morning, supported by buying of electronic component makers and other exporters as a weaker yen boosted sentiment, offsetting concerns about poor China December trade data.

The Nikkei share average gained 0.9% to 20,544.64 at the midday break, its highest level since December 20. Soon after Tuesday’s opening, the index was down 0.5%.

China’s December exports unexpectedly fell the most in two years and imports contracted from a year earlier, official data showed on Monday.

The data dented shares in many markets on Monday, when Japan was closed for a holiday. But on Tuesday, analysts said that investors in Japan focused on positive factors such as the weaker yen and bought back shares of exporters, which had fallen in the past few weeks.

The yen weakened 0.24% to be ¥108.46 to the dollar.

“Investors are relieved that the dollar-yen seems stable now,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

“If the dollar falls below ¥108 and nears ¥105 again, they would worry about the impact on corporate earnings but the current level seems comfortable.”

Kuramochi also said that rising US futures are lifting hopes that US shares will open on a strong note later in the day. SP e-mini futures were up 0.5%.

Tokyo Electron rallied 3.2%, Kyocera gained 2.8% and TDK advanced 2.5%.

Nintendo jumped 5%, with traders saying reflected reaction to a Barron’s article suggesting that Apple buy the Japanese game console maker to spark a turnaround. 

“Investors are taking heart from the article. But the rally will likely be short-lived” as the potential consequences of any merger or purchase are not clear, said Hikaru Sato, a senior technical analyst at Daiwa Securities.

The broader Topix rose 0.8% to 1,541.90. Advancing issues outnumbered declining ones 1,520 to 541. 

Reuters