TOKYO, Aug 9: The Nikkei share average bounced back on Friday morning after recent steep losses, helped by the yen’s retreat from a seven-week high against the dollar and gains on Wall Street. The gauge has lost 5.5 percent over the past two sessions.
Investors are also looking for leads from Japan’s preliminary gross domestic product data due on Monday and a batch of Chinese economic figures later in the session.
The benchmark Nikkei rose 0.6 percent to 13,687.44 by the midday break, but was on course for a weekly loss. The broader Topix gained 0.7 percent to 1,147.65.
‘Yesterday’s sell-off was surprisingly violent although the SQ always is a market focus ahead of its settlement,’ said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo, referring to the settlement of Nikkei options contracts.
The closely-watched settlement price, known in Japan as the special quotation or SQ, is calculated from the opening prices of the 225 shares in the Nikkei average on the second Friday of the month. The August contract was set at 13,640.03.
‘We’re in the summer doldrums and trading volume is weak. The outlook is uncertain. While major policymakers go on holiday globally, it leaves the market vulnerable,’ said Worrall. ‘The big issues seem to be uncertainties over the timing of Fed tapering and the successor of Chairman (Ben) Bernanke.’
As a weaker yen tends to make export-reliant Japan’s products more competitive in the global market, blue-chip exporters outperformed the overall market on Friday. Sony Corp and Toyota Motor Corp advanced 1.8 percent and 1.1 percent, respectively.
The Japanese currency was last traded at 96.66 yen against the dollar, moving away from a seven-week high of 95.81 yen touched on Thursday.
The yen is down 11 percent versus the dollar for the year, weighed by the Bank of Japan’s radical monetary stimulus launched in April to end years of stubborn deflation and foster growth.
Other notable gainers included index heavyweight SoftBank Corp, which added 1.9 percent after banking sources told Reuters that the wireless carrier was raising a jumbo $20 billion yen-equivalent loan, which is the biggest ever syndicated loan to be raised in the Asia Pacific region.
Bucking the overall trend, Nikon Corp tumbled 15 percent after the camera maker cut its full-year profit due to disappointing demand for mirrorless cameras.
‘It’s going to be another futures-driven trade, with the volume remaining low. As the recent slide was just too steep and groundless, there will be little surprise if the stocks gain for no big reason,’ said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. ‘I think the Nikkei could test the 14,000 mark.’
Analysts say investors are awaiting fresh cues from GDP data for the April-June quarter and China’s economic data for July.
China’s industrial output, urban investment and retail sales will be released later on Friday. Loan growth and money supply figures could be released any time between Aug 8-15.
The market largely shrugged off earlier inflation and producer price deflation data showing the world’s second-largest economy may be stabilising.
The Nikkei is up 32 percent this year, spurred by the Japanese government’s fiscal expansionary policy and the Bank of Japan’s aggressive monetary stimulus. (AGENCIES)
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