Japan's Nikkei average gained 0.7 percent on Thursday, recouping the previous day's losses as upbeat US earnings brightened sentiment ahead of Japanese corporate results. Stronger-than expected US new-home sales and President Barack Obama's call for lower corporate taxes spurred hopes for higher profits and a sustained recovery in the world economy, also helping the Nikkei and other indices across Asia post gains.
Japan's earnings season was kicking into higher gear on Thursday with printer and camera maker Canon Inc, game maker Nintendo Co Ltd and Japan's largest personal computer firm, NEC Corp, announcing October-December earnings after the market's close. High-tech and commodity shares led the advance after US network technology firm Juniper Networks' quarterly sales beat market expectations and metal processor Allegheny Technologies Inc forecast stronger sales in 2011.
The benchmark Nikkei ended the day up 0.7 percent or 76.76 points at 10,478.66, with technical sentiment brightening slightly after it broke through its 25-day moving average, now at 10,415. The broader Topix index rose 0.8 percent to 929.66. Volume picked up from the previous day, with 2 billion shares changing hands on the Tokyo Stock Exchange's main board, slightly below last week's average of 2.15 billion shares.
Some market players said that after aggressively adding laggard banking and property stocks, foreign investors, who now account for over 60 percent of the Tokyo market, were picking up high-tech shares. One of them, industrial robot maker Fanuc Ltd, surged 4.6 percent to 13,250 yen in heavy trade after the factory robot maker said its net profit for the October-December quarter more than doubled from a year earlier to 30.8 billion yen ($375 million) on strong demand in China, but left its full year forecast unchanged.
"Fanuc is the story of the day, but everyone is waiting for other heavyweights to report later today and over the next week," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. Fanuc's weighting in the Nikkei stands at around 4.9 percent, according to Thomson Reuters data, so gains in the stock give a significant boost to the whole index.
Foreign net buying of stocks notched up to a 12th week of gains last week although it tumbled to 18.4 billion yen ($223.9 million) from 325.2 billion yen a week earlier. "I'm not too worried about the fall in net foreign buying in just one week. I still believe the basic trend of foreigners buying Japanese stocks has not changed," Mitsubishi UFJ Morgan Stanley's Yamagishi said.
Nomura Asset Management's investment trust fund, or toushin, that will invest in laggard Japanese equities appeared to have attracted a total 600-700 billion yen ($7.30-8.52 billion) from retail investors, market sources said. The rare large inflows into a retail-targeting Japanese equities fund underscores a recent trend for more investors to take exposures in Tokyo shares based on their strong performance over the last three months, analysts said.
Renewed optimism about the global economy lifted prices of oil on hopes for stronger energy demand, buoying resources shares such as Inpex Corp, Japan's top oil and gas developer, which gained 2.7 percent to 533,000 yen and Sumitomo Metal Mining Co Ltd, up 1.3 percent at 1,387 yen.