TOKYO: Japanese equities kicked off the week with an earnings-related boost, leading gains in the Asia-Pacific though much of the region was shut for a holiday. Analysts expect uncertainty ahead of the French presidential runoff election on May 7 to limit any gains this week, with many investors likely to stay on the sidelines before the results. The Nikkei Stock Average NIK, +0.70% closed up 0.6% to end at 19,310.52 to start a two-day trading week, with markets breaking for a holiday Wednesday through Friday. Many other Asian, and most European markets, are closed Monday for the labor day holiday. “Basic story today is that earnings are quite good and political uncertainty is lowering,” said Masayuki Kubota , chief strategist at online brokerage Rakuten Securities .
Chip production equipment maker Tokyo Electron 8035, +0.68% jumped 13% after the company reported a 48% net profit increase for the fiscal year ended March. Among other earnings-related trading, shares of systems integrator NTT Data 9613, +0.00% surged 5.8% after it projected stronger revenue and profits for the year ended March. Electronics maker Fujitsu 6702, +0.53% jumped 8.4% after it projected a 64% increase in net profit for the current fiscal year. Elsewhere in the region, Australia’s S&P/ASX 200 XJO, -0.10% was up 0.6% to end at 5,956.50, driven in part by big banks ahead of earnings reports starting this week. “Investors are anticipating solid results supported by low bad debt provisions and cost control. Yield investors continue to see banks as a relatively stable income proposition,” said Ric Spooner, chief market analyst at CMC Markets. Back in Japan, the market’s gains were also buoyed by a weakening currency. The dollar USDJPY, +0.24% was at ¥111.88, compared with ¥111.37 when Tokyo markets closed on Friday.
Meanwhile, Japan’s debt market was muted ahead of the French runoff election and a shortened trading week. The 40-year government bond yield was down 0.005 percentage point at 0.985%, while the 5-year yield was up 0.005 percentage point at 0.160%. For now, investors will look at U.S. economic data to gauge how the yen will perform in the short term, said Kubota. The Federal Reserve’s preferred measure of inflation, the personal-consumption expenditures price index, is expected later in the global day, and was expected to show little change in consumer costs in March.“People don’t yet believe the U.S. economy has peaked. If this changes then the dollar will drop,” Kubota added.
