Nikkei continues rally early on Monday
The Nikkei 225 continued to make solid gains on the back of yet further weakening of the Yen early on in Monday’s session. The index hit a five and a half year high of 15,356.31 but retreated to 15,347.01 by the midday break. Additional factors that the rise has been attributed to include the the Japanese government making positive comments regarding their economy and the US markets reaching new record highs late on Friday, underpinning the recent growth in markets across the globe.
Todays rise now means that the Nikkei has advanced by almost 50 percent this calendar year, a fifth of which has been added since the the dollar broke the faux ceiling of 100¥ earlier this month.
The Japanese government’s monthly report stated “(the) economy is gradually recovering”, taking great strides from its situation last month, when it was deemed to only be showing “signs” of growth. The nation has suffered from a deflation issue for more than two decades but Bank of Japan governor Haruhiko Kuroda and Prime Minister Shinzo Abe have taken an extremely aggressive stance with monetary policy and economic stimulus packages.
Naturally with further weakening of the Yen, we saw more gains from exporters. Komatsu Ltd saw gains of 2.1 percent during early trading, following Toyota Motor Corp and Sony Corp, who advanced by 2.2 percent and 5.9 percent respectively. With the Yen weakening and Friday seeing positive data from the US on consumer sentiment, exporters are expected to continue to make solid gains throughout the day.
Looking further ahead, many analysts predict that exporters across the board will see a rally when they announce their quarterly earnings. Most exporters have based their projections on a Yen that is trading in the mid-90’s to the dollar. With reduced production costs, increased sales and better-than-expected reports likely to be a consistent trend, shares will likely rise sharply in the run up to and immediately after the reports are announced.
At the time of writing the Yen was trading at 102.73 against the dollar and 156.05 against the British Pound.