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Nikkei climbs on robust sentiment

TOKYO - Japan’s Nikkei share average headed up on Tuesday morning as individual investors hunted for stable companies that were punished heavily for poor earnings, with hopes for global stimulus providing ballast to a quiet market.

Softbank Corp, a domestically-oriented favourite, put on 2.4 percent to strike a 15-month high, while advances for trading houses such as Marubeni evidenced robust risk sentiment even as food companies and other defensives firmed.

The Nikkei rose 0.5 percent to 8,931.18 after briefly stepping above its 200-day moving average at 8,959.17, a move analysts say would be an important marker of bullish sentiment if it could be sustained.

“It seemed that the aggressive short selling that had been going on for a couple of months has kind of dried up,” said a senior trader at a foreign bank. “Global quantitative easing is being priced in but we find ourselves with nothing to verify or dismiss that.”

Hopes that central banks will introduce further easing policies to boost a flagging global economy helped the Nikkei to its biggest weekly gain last week since February, despite the Bank of Japan leaving policy unchanged.

“I’m getting requests from people who want to look into fundamentally okay companies that will survive and have been beaten down (by earnings) which suggests they’re looking to be a bit more invested when they come back from the holidays,” the trader said.

Trade remained thin, with volume on the Nikkei just 36.8 percent of its full-day 90-day average by the midday break after stooping to its lowest since December 30 on Monday. Investors remained unperturbed by lower-than-expected gross domestic product growth in Japan’s April-June quarter.

“There’s a sense that even if GDP underperformed in the first quarter things will improve from now on; domestic investors tend to take a slightly more long-term perspective,’ said Hiroyuki Mutsuro, head of execution support at Mizuho Securities.

Confidence that domestic demand will stay strong helped convenience store operators Lawson Inc and FamilyMart Co Ltd each gain 1.2 percent.

The broader Topix index rose 0.3 percent to 749.26. In a bearish sign, the index’s 100-day moving average broke below the 200-day moving average to form a “dead cross”.

However, a trader said it could be a contrarian indicator because its opposite, a bullish “golden cross” preceded a sell-off in April.

Shippers out of favour, gree up ahead of earnings

“We’re likely to see a focus on net-related stocks like DeNA and Gree because they’re favoured by individual investors, who dominate during the holiday season,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities.

Online gaming company Gree Inc climbed 3.6 percent as the second-most traded stock on the main board ahead of the company’s earnings report later on Tuesday, adding to its 13.7 percent gain over the previous two sessions after rival DeNA posted surprisingly strong earnings.

DeNa lost 0.3 percent, however, as investors took profits after the stock soared 24.2 percent over the previous two days.

Shippers sank 2.4 percent after JPMorgan downgraded the sector to “neutral” from “overweight”.

“We think earnings momentum will probably deteriorate over the next 3-6 months, with sector companies lowering guidance and consensus estimates coming down,” analyst Hitoshi Hosoya said in a note.

JPMorgan lowered its rating on shipper Mitsui O.S.K. Lines Co Ltd to “neutral” from “overweight” and removed it from its Analyst Focus List as a Most Preferred stock, aiding in its fall of 2.7 percent.