Nikkei Finds Support in Rising Wages in Japan

Hiruki Nakamura
25 Mar, 2015
New York City

Nikkei index trimmed losses of the day after investors remained focused on dividend expiry on Thursday. Nikkei is likely to surpass 20,000 mark as long term investors remain in accumulation phase as wage gains spread across the economy.

[R]4:30 PM Tokyo – Nikkei index trimmed losses of the day after investors remained focused on dividend expiry on Thursday. Nikkei is likely to surpass 20,000 mark as long term investors remain in accumulation phase as wage gains spread across the economy.[/R]

Stocks in Tokyo closed higher and the yen held firm after investors focused on domestic economic news and long term investors hoped that the rising wages for consumers and earnings for corporations will support higher market indexes.

The widely followed Nikkei index trimmed the losses of the day after investors remained in the buy-mode ahead of dividend expiry on Thursday.

In addition, long term investors continue to add exposure to Japanese stocks as the Nikkei approaches 20,000 on the hopes that the recent rise in wages at large exporting companies will support consumer spending, supporting the inflation goal targeted by the government and the central bank.

Japan’s producer prices in February climbed 3.3% from a year ago month, the Bank of Japan said.

The Nikkei 225 Stock Average gained 32.75 or 0.2% to 19,746.20 and the broader Topix index rose 4.42 to 1,592.01.

The yen closed at 119.66 against a dollar.

Stocks in Review

Cyberdyne Inc soared 6.7% to 3,265 yen after the Nikkei news reported robot maker forecasted net loss of 576 million yen on higher than expected research and development costs.

Japan Retail Fund Investment Corporation slipped 1.6% to 243,600 after the real estate developer agreed to acquire “EDION Kyobashi” tower located in Kyobashi, Osaka for about 5.76 billion yen.

Sumitomo Corporation gained 1.4% to 1,379.50 after the trading company forecasted net loss for the year of 85 billion yen after additional write-downs on its resources investments.

The company said it may write-down 325 billion yen in asset values from major projects higher than 240 billion yen in impairments estimated in September, the worst write-down since 1997. The company had issued a warning in February that its original write-down estimate may be revised higher.

Sumitomo estimated profits to recover to 230 billion yen in fiscal 2016.

Toyo Engineering Corp tumbled 14.5% to 335 yen after the engineering company forecasted net loss of about 17 billion yen in the current fiscal year on the account of operational problems at its unit in Brazil.