Roundup: Tokyo stocks leap as U.S. jobs data lifts mood, yen's retreat adds support

Tokyo stocks closed sharply higher Monday as investor sentiment was lifted by U.S. jobs data coming in better-than-expected at the end of last week, which gave market players a chance to better gauge the U.S. Federal Reserve's interest rate hike plans, while the yen's retreat against the U.S. dollar also added support.

The 225-issue Nikkei Stock Average added 396.12 points, or 2.44 percent, from Friday to close the day at 16,650.57, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 25.63 points, or 2.00 percent, to finish at 1,305.53.

Local brokers said that the release of data from the U.S. revealing the world's largest economy had created 255,000 confirm jobs last month, indicating the economy's stability, was an initial catalyst for buying.

In addition to the employment rate rising for a second straight month in July, the unemployment rate remaining unchanged at 4.9 percent, according to the U.S. Bureau of Labor Statistics, was also a positive here, local traders said, as was the unemployment rate, which held steady at 7.8 million.

The 62.8 percent labor force participation rate and the employment-population ratio being at 59.7 percent, little changed in the recording month, were also cheered by global markets, traders here said.

Hitoshi Asaoka, a senior strategist with Mizuho Trust & Banking Co. said that had the key U.S. jobs data come in below par, market volatility would be increased and investors would switch to a risk-off mode, but, as such, all concerns were availed as the data came in ahead of market expectations.

Asaoka added, however, "It does leave room for a rate increase within this year, but that will be offset by the impact on the yen, which will in turn support Japanese stocks."

Economists concurred that the figures not being robust enough to force the Fed's hand into a rate hike this autumn was a conducive environment for stocks for the time being, and that the positive sentiment on the market floor Monday had partly detracted from disappointment surround the Bank of Japan's (BOJ) latest easing measures, which have been deemed tepid.

According to Soichiro Monji, general manager for the economic research department at Daiwa SB Investments Ltd., domestic stocks have been impacted by unknowns ahead linked to the Bank of Japan's monetary policy."

He was referring to the central bank's policy decision at the end of July that saw the bank almost double its exchange-traded-fund (ETF) purchases to 6 trillion yen (58.59 billion U.S. dollars), yet keep its monetary base and negative interest rate program unchanged.

"The Japanese stock market has been stagnant mainly because of uncertainties surrounding the BOJ's monetary policy," Monji said, adding, "The latest U.S. economic data has encouraged buying in Japanese stocks on the view that shares are undervalued."

Brokers here also said that an overall upbeat market mood on the first trading day of the week was underpinned by the yen's retreat against the U.S. dollar, which saw the dollar changing hands in the 102 yen zone, down from 101 yen logged at the end of last week.

The yen's depreciation against the greenback is always a boon for exporter-linked shares as a weaker yen means that those firms' overseas profits are boosted when repatriated, while their competitiveness in foreign markets is also enhanced when the yen is comparatively low versus its major counterparts.

As such, construction firm Komatsu leapt 6 percent to 2,117 yen, while automated machinery maker Fanuc Corp. jumped 3.8 percent, as Toyota Motor Corp. accelerated 3.3 percent.

Among the day's biggest gainers, Pioneer Corp. surged 16.9 percent to 221 yen, while DOWA Holdings Co., Ltd. powered up 16 percent to close at 637 yen.

NTN Corp., meanwhile, was also among the day's biggest winners, advancing 10.8 percent to finish at 367 yen.

Issues gaining traction on earnings reports, included Sumitomo Realty & Development, which rose 8.8 percent to 2,868 yen, following the real estate firm announcing its consolidated net profit for the April-June quarter had increased some 40 percent from a year earlier.

But decliners were led by Comsys Holdings Corp., which retreated 5.9 percent to 1,729 yen and Toyobo Co., Ltd., which dropped 5.8 percent to close at 161 yen.

While Taisei Corp. fell 4.4 percent to 783 yen, Japan Display lost 6.5 percent to 174 yen, following news that the conglomerate will receive government funding, compounding concerns after it announced an earnings estimate for the April-June quarter last week that missed market expectations.

With the exception of pharmaceutical-related issues, all industry categories closed in positive territory on the main section, with the total volume climbing from Friday's 1,889.57 million shares to 2,117.48 million shares.

On the First Section, advancing issues trounced declining ones by 1,392 to 502 and the day's turnover was 2,259.3 billion yen (22.06 billion U.S. dollars). Endit