Tokyo Market: Nikkei - Shares are looking up

Japan's key stock average may climb toward a four-month high this week, lifted by foreign investors hopeful that conditions for economic recovery are improving. Surging US shares, which point to a strong market for exporters, and signs the government may be more consumer-friendly are also helping.

"Sentiment from overseas is more optimistic than it has been for 12 months," said Fiachra MacCana, head of research at WestLB Securities Pacific. "There is this pent-up demand, certainly among North American investors, to increase their weightings in Japan."

Investors say the benchmark Nikkei 225 average may approach 15,500, a level untested since early August. Foreign brokerages were net buyers of Japanese shares every day last week, during which the Nikkei rose 1.9 per cent to 15,069.4.

"[Foreign investors] are saying, 'We sold off XYZ stock because we thought the US was going to tank, and we're wrong, it's moving the other way,' " said Mr MacCana. He expects foreign funds to flow back into Japanese companies "that benefit from a strong US economy".

Shares in retailers such as Seven Eleven and other consumer-oriented industries may also rally on expectations the government will cut taxes further to encourage individual spending.

"The government is finally giving the impression that it's listening to the market," said Hitoshi Yajima, director of Tachibana Investment Management. "That's why we were able to get past 15,000." Still, banks and construction companies may lag the market. The country's 18 largest lenders are being criticised for announcing plans to apply for only $47bn (pounds 29bn) of a fund established by the government to replenish their capital.

Government bonds are likely to fall amid expectations the government will sell more bonds to finance tax cuts to boost spending. Last week, the benchmark government yield rose 17.5 basis points to 1.075 per cent.

Fears of an increase in supply grew after the government decided to sell about 10 trillion yen of bonds, more than earlier expectations, to finance its third supplementary budget for this year. Bonds may also fall if the Nikkei 225 stock average stays above 15,000.

"The direction of the bond market may have changed," said Akitsugu Bando at Okasan Capital Management. "Until now, it was able to keep rising because there seemed no hope for stocks. But with the Nikkei seemingly supported at 15,000, the picture may have changed."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory