Nikkei snaps three-day losing streak after strong China data

TOKYO Thu Jan 24, 2013 3:50pm IST

A man looks at a stock index board in Tokyo January 22, 2013. REUTERS/Kim Kyung-Hoon/Files

A man looks at a stock index board in Tokyo January 22, 2013.

Credit: Reuters/Kim Kyung-Hoon/Files

Related Topics

Stocks

   

TOKYO (Reuters) - Japan's Nikkei share average rose on Thursday, snapping a three-day losing streak after strong Chinese manufacturing data helped firms with high exposure to the world's second-largest economy, while exporters gained ground after the yen weakened.

The Nikkei gained 1.3 percent to 10,620.87, climbing back above the 10,600 level after hitting a three-week closing low on Wednesday. The Nikkei is down 2.68 percent so far this week, on track to snap a 10-week winning streak that was its longest string of weekly gains since 1987.

The market started with a soft tone on Thursday, weighed down by Japanese suppliers to Apple Inc (AAPL.O) that fell on disappointing iPhone sales figures. But most reversed their losses after data showed that growth in China's factory sector hit a two-year high in January.

Komatsu Ltd (6301.T), a construction equipment maker with a heavy contribution to its sales from China, advanced 2.2 percent and Hitachi Construction (6305.T) added 1.9 percent, while the Nikkei China 50 subindex .NCHN rose 1.4 percent.

The China HSBC flash purchasing managers' index (PMI) rose to 51.9 in January, the highest since January 2011 and above the 50-point level that shows accelerating growth in the sector from the previous month.

"China helped, but basically three days of losses has created a nice dip-buying opportunity. It's very easy to get in there today," said Masato Futoi, head of cash equity trading at Tokai Tokyo Securities.

"The underlying tone is still bullish, so even bad news about Apple or whatever doesn't hit stocks too hard."

Exporters were in demand, with Toyota Motor Corp (7203.T) rising 2.2 percent, Honda Motor Co (7267.T) gaining 2.0 percent and Panasonic Corp (6752.T) adding 1.2 percent.

After coming under pressure in morning trade, Apple suppliers Murata Manufacturing Co Ltd 6981.OS, Foster Electric Co Ltd (6794.T) and Taiyo Yuden Co Ltd (6976.T) ended the session with gains ranging from 0.4 percent to 4.2 percent. However, Ibiden Co Ltd (4062.T), which makes printed circuit boards for the iPhone, slid 4.7 percent.

Apple said it had shipped 47.8 million iPhones in the December quarter, below the roughly 50 million predicted by Wall Street analysts, sending its shares skidding 10 percent in extended trading as investors cut their exposure to the stock.

EARNINGS IN FOCUS

Quarterly earnings figures are beginning to trickle in, with Japan's earnings reporting season moving into higher gear next week.

"It is widely expected that Oct-Dec results will be bad," said Yoshiyuki Kondo, an analyst at Daiwa Securities. "But the outlook is good for the year ending in March and next year."

Many exporters could end up exceeding their latest forecasts for the year to March, which were based on conservative foreign exchange rate assumptions, analysts said.

"Some companies have assumptions that are 10 yen higher to the dollar than current dollar-yen levels, so their earnings prospects are good for the foreseeable future," Kondo said.

On Thursday, the dollar rose 0.7 percent against the yen to 89.21 yen, pulling away from a one-week low of 88.06 yen hit the previous day.

Bellwether companies such as Toshiba Corp (6502.T), Honda Motor Co (7267.T) and Softbank Corp (9984.T) are scheduled to report their third-quarter results next week.

Yaskawa Electric Corp (6506.T) fell as much as 8.8 percent to a one-month low before ending down 4.1 percent at 793 yen after the company reported a 39 percent drop in operating profit in the nine months to December, hurt by weak demand for servo motors in China and Europe.

Toshiba Corp (6502.T) gained 4.1 percent after it and General Electric Co (GE.N) said they will enter a global strategic alliance to develop and sell fossil-fuel power equipment and consider a joint venture in the business.

Many analysts remain bullish on the Japanese market, including those at Goldman Sachs, who said in a report published on Thursday that the Topix index could rise as high as 1,270, or 43 percent above its current level, if the yen weakened to 100-110 against the dollar.

The broader Topix percent to 897.62 in relatively thin trade, with 3.27 billion shares changing hands, compared with last week's average daily volume of 3.73 billion shares.

(Additional reporting by Sophie Knight; Editing by Edmund Klamann)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-WTO Row

REUTERS SHOWCASE

Market Eye

Market Eye

Nifty falls most in nearly 3-1/2 weeks; Sensex down over 400 points  Full Article 

Factory Activity

Factory Activity

Factories post fastest growth for 17 months in July  Full Article 

Paying for Bail

Paying for Bail

Jailed Subrata Roy gets office to negotiate hotel sales.  Full Article 

Rupee Dips

Rupee Dips

Rupee posts biggest weekly loss since record lows in August.  Full Article 

Reviving Infosys

Reviving Infosys

CEO Sikka says to improve business with new growth avenues  Full Article 

Outlook Slashed

Outlook Slashed

ArcelorMittal cuts outlook as ore prices hit mining  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China, Asian factory growth gathers pace; Europe falters  Full Article 

Factory Lockout

Factory Lockout

Pfizer says threats to managers force staff lockout at Mumbai factory .  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage