Nikkei marks best day since March 2011 on US jobs boost

 

 Japan's Nikkei share average jumped 4.9% on Monday, marking its biggest one-day gain since March 2011, after US jobs data eased growth concerns but was not strong enough for the Federal Reserve to scale back massive stimulus.

 

Investors were also encouraged by data that showed Japan's economy grew 1.0% in January-March, revised up slightly from a preliminary estimate. The figures underscored a steady recovery driven by a pickup in global growth and sweeping stimulus policies by Prime Minister Shinzo Abe.

 

"(The US jobs data) was better than market consensus but was not good enough to lead to the early tapering of stimulus," said Ryota Sakagami, chief strategist at SMBC Nikko Securities.

 

"Still the global economy situation is uncertain. Until the upper house election in July, the market is likely to...trade in a range between the current level and 14,000."

 

The solid US data helped lift the dollar against the yen, giving the shares of currency-sensitive Japanese exporters a boost. The yen was last traded at 98.395 to the dollar, down from a two-month high of 94.975 touched on Friday.

 

The Nikkei ended 636.67 points higher at 13,514.20, moving further away from the bear market territory it hit last week. Trading volume hit a one-month low of 2.43 billion shares, indicating relatively low conviction for the rally.

 

The benchmark has fallen 15% from a 5-1/2 year peak it reached on May 23, and trading has been characterised by violent price moves over the past two weeks, as investors were spooked by worries over slowing growth in China and uncertainty over whether the Fed would roll back its stimulus this year.

 

Investors have also been disappointed with Abe's growth strategy last week to revive the world's third-largest economy.

 

Highlighting the volatility, the Nikkei has had 10 sessions where intraday swings exceeded 2.5% since May 23, compared with 16 such trading days for the year up to May 22 and four such days in the whole of 2012. The US S&P 500 only has had one such trading day in 2013, and the Euro STOXX 50 index has 11.

 

Still, the Nikkei is up 9% since April 4, when the Bank of Japan unveiled audacious stimulus measures and has risen 30% so far this year.

 

Sources said the BOJ will consider taking further steps when it concludes a two-day meeting on Tuesday to curb volatility in the government bond market as sudden spikes in yields threaten to undermine its aim of dragging the economy out of deflation.

 

CRUISE HIGHER

 

Toyota Motor Corp rose 8.6% and was the second-most traded stock on the main board by turnover on Monday, while Mazda Motor Corp , also heavily traded, rallied 11.5%.

 

Deutsche Bank said Japanese automakers have become more competitive whether the yen is trading at 100 yen to the dollar or 96 to the dollar.

 

"As such we still are attracted to Japanese names with leverage to export growth - namely Toyota and Mazda."

 

Financials were also in demand, with Japan's top brokerage Nomura Holdings , the third-most traded, up 6.6%, lender Mitsubishi UFG Financial Group  up 5.8%.

 

The broader Topix index climbed 5.2% to 1,111.97.

 

In terms of valuations, Japanese equities now carry a 12-month forward price-to-earnings ratio of 14.9, down from a three-year high of 16.3 reached more than a week ago, data from Thomson Reuters Datastream showed.