Nikkei breaks through 9,000 ahead of Fed stimulus decision

Thu Sep 13, 2012 9:02am IST

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    * Nikkei up 0.5 pct, Topix rises 0.4 pct
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    * Market in wait-and-see mode ahead of FOMC

    By Sophie Knight
    TOKYO, Sept 13 (Reuters) - Japan's Nikkei share average
broke through 9,000 for the first time in two weeks on Thursday
morning on heightened expectation of fresh stimulus from the
U.S. Federal Reserve, with big gains for shippers and Apple
suppliers buoying the market. 
    Investors shielded themselves from the risk of a stronger
yen -- the anticipated effect of further Fed easing -- by buying
up stocks of companies with little exposure to overseas markets,
such as social networking site Gree Inc. 
    Gree rose 4.9 percent and was the second most-traded stock
on the main board, behind rival DeNA Co Ltd, which was
up 4.6 percent.
    The Nikkei put on 0.5 percent to 9001.39, climbing
above its 200-day moving average at 8,998.67. 
    "I think that there's a slow-motion crystallisation of a
sort of latent optimism," said Stefan Worrall, director of
equity cash sales at Credit Suisse in Tokyo. "The events at
least look more encouraging."  
    Investors' hopes for progress in reducing punishingly high
borrowing rates for highly indebted euro zone nations were
answered after Germany's highest court gave the go-ahead for the
country to ratify the European Stability Mechanism, while Dutch
voters came out in favour of a pro-euro party.
    "Germany did what everyone expected, but now all eyes are on
the Fed," said Hirokazu Fujiki, manager of investment strategy
at Okasan Securities. "Even if they decide to purchase more
bonds, no one knows the potential scale or content of those
purchases, which is creating a lot of uncertainty." 
    Expectations of a third round of "quantitative easing" via
bond purchases were raised by last Friday's disappointing U.S.
jobs data. Fed Chairman Ben Bernanke framed employment concerns
as a justification for further stimulus in a speech last month.
    More quantitative easing by the Fed is expected to boost
sentiment in global markets, but there are also fears it will
further weaken the dollar against the yen, which hit a
3-1/2-month high against the greenback on Tuesday, hurting
exporters.
    The broader Topix rose 0.4 percent to 744.88. 
    
    SHIPPERS AFLOAT AGAIN
    Shippers saw massive gains, with the index up 6.2
percent after losing 7.3 percent last week as prices for iron
ore struck a three-year low. 
    "The shippers sold off on the idea that the bulk commodities
-- iron ore, coal and so on -- were hitting new lows, while
these gains seems to be a delayed reaction to those prices
picking up after China's news last Friday," said Credit Suisse's
Worrall, referring to China's approval of 60 infrastructure
projects worth more than $150 billion.
    Parts suppliers to Apple Inc were in demand after
the U.S. company unveiled a new iPhone, with Meiko Electronic Co
Ltd jumping 17.1 p e rcent a n d Foster Electric Co Ltd
, Sumida Corp and Murata Manufacturing Co Ltd
 gaining between 2.1 and 5.2 percent. 
    TDK Corp, which surged 6.6 percent on Wednesday on
a brokerage report, rose another 3.4 percent. SMBC Nikko
Securities said TDK was undervalued as worries about demand for
its hard disk drives were unwarranted, and production could ramp
up next year when PC replacements should reach a peak.
    Elsewhere, Itochu Corp slightly outperformed the
market by putting on 0.9 percent after Dole Food Company Inc
 said it was in advanced talks to sell the Japanese
trading company its packaged foods and Asia fresh businesses for
around $1.7 billion.
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