Nikkei gains on BOJ stimulus optimism, with tailwind from Wall Street


TOKYO: Japan’s Nikkei share average got off to a bright start on Monday, buoyed by gains on Wall Street and hopes that the Bank of Japan will unveil stimulus steps later this week.

But shares of Nintendo Co lost some of their recent lustre, tumbling as much as 18 per cent after the company said smash-hit mobile game Pokemon GO would have only a limited impact on its earnings.

The Nikkei stock index rose 0.4 per cent to 16,690.60, moving back toward seven-week intraday highs touched on Thursday last week. In the previous week, the Nikkei had gained 0.8 per cent.

“I’d say there’s probably a great chance of the Nikkei testing the upside of its range,” said Yutaka Miura, senior technical analyst at Mizuho Securities, who sees downside support at 16,000 points, in a market that has been facing resistance around 17,000.

US stock prices marked four straight weeks of gains last week, with the S&P 500 setting another record closing high on Friday.

The US Federal Reserve will meet this week but is all but certain to keep interest rates on hold on Wednesday, with investors’ focus mainly on what the Bank of Japan decides to do. A majority of economists surveyed by Reuters expect Japan’s central bank to take easing steps at its two-day meeting that ends on Friday.

The Japanese government is also putting together a massive spending package worth about 20 trillion yen ($187.8 billion), government sources told Reuters last week, though actual public spending will be far less than the headline number suggests.

“There are expectations for stimulus, and these are continuing to lift the market,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Last week, BOJ Governor Haruhiko Kuroda’s remarks in a BBC Radio 4 interview doused investors’ hopes that Japan would embark on a drastic “helicopter money” stimulus programme, under which the central bank would finance government budgets to fight deflation.

“Kuroda’s BBC interview was recorded last month, before Brexit,” Fujito said, and the market turmoil that followed Britain’s vote to exit from Europe.

Kuroda said on Sunday at a G20 finance leaders meeting in China that he would decide policy appropriately, taking into account the need to hit its 2 per cent inflation goal as early as possible. He said the G20 did not discuss “helicopter money” at all.

G20 policy makers agreed to work to support global growth in the face of the Brexit impact, as well as fears of rising protectionism.

Economic data released early on Monday showed that Japan’s exports fell less than expected in June, a tentative sign that overseas demand could be recovering from persistent weakness that set in last year.

Also on Monday, the Japanese government left unchanged its assessment of exports and industrial production, but there are signs that corporate activity is losing momentum as exports decline.