Nikkei climbs 2.7% on upbeat earnings reports, gains in US futures

SYDNEY: Japanese shares rose sharply on Monday as some better-than-expected earnings and a rise in U.S. stock futures lifted market sentiment.

The benchmark Nikkei average advanced 2.7 per cent to 19,783.22, its highest closing since April 17, with the Nikkei volatility index, considered a fear gauge based on option pricing, falling 9.8 per cent to 34.9.

E-Mini futures for the S&P 500 climbed 1.2 per cent by late Asian trade after a soft start, providing an extra boost to Japanese stocks.


During the market's midday break, the Bank of Japan (BOJ) announced widely anticipated measures to ease corporate funding strains, including increased buying of commercial paper and corporate bonds.

The overall impact of BOJ's decision on the market was modest, especially as the central bank left the annual pace of its purchases of exchanged traded funds (ETFs) and Japanese real estate investment trusts (J-REITs) unchanged.

Advantest Corp jumped 8.4 per cent after the chip-testing equipment supplier forecast a 14.2 per cent year-on-year increase in operating profit for the April-June quarter.

"Even with difficult external conditions, Advantest expects steady growth in test demand and aims to sustain and expand market shares in 5G milliwave and high-end memory areas," said Jefferies analyst Masahiro Nakanomyo.

Fanuc Corp surged 12.0 per cent as the factory automation company's profit drop in the business year ended in March was not as bad as some had feared.

Analysts said investors also were pleased by Fanuc's earnings forecast for the April-September half, as it allowed the market to gauge the potential downside from the impact of the coronavirus.

Daiichi Sankyo Co Ltd fell 1.5 per cent after the drug maker logged a 56.6 per cent drop in net profit for the year through March and announced a 3-for-1 share split.

Sekisui Chemical Co Ltd climbed 3.5 per cent after the company announced a plan to buy back up to 1.75 per cent of its own shares worth 16 billion yen ($150 million).

Denso Corp shed 2.3 per cent after the auto parts maker slashed earnings forecast for the year ending March 2021.

The broader Topix added 1.8 per cent to 1,447.25, with all but one of the 33 sector sub-indexes on the Tokyo exchange finishing higher.

Highly cyclical sea transport, iron and steel and non-ferrous metals were the top three performing sector subindexes on the main bourse.

Overall activity was subdued, with the volume of shares traded on the main board valued at 2.01 trillion yen, below its average over the last 20 days of 2.35 trillion yen.

Traders said some investors stayed on the sidelines ahead of other key central bank meetings of the U.S. Federal Reserve and the European Central Bank due later this week.

Elsewhere, the index of Mothers start-up shares rose 2.4 per cent.