Nikkei, Topix end at record highs on earnings optimism

Tokyo's Nikkei and Topix stock indexes closed Thursday at all-time highs, as investors snapped up technology and exporter issues on hopes for robust earnings on the back of a weaker yen.

The 225-issue Nikkei Stock Average ended up 332.89 points, or 0.82 percent, from Wednesday at 40,913.65, surpassing a record set on March 22. The broader Topix index finished 26.29 points, or 0.92 percent, higher at 2,898.47, topping its previous high on Dec. 18, 1989.

On the top-tier Prime Market, gainers were led by nonferrous metal, transportation equipment and bank shares.

The U.S. dollar fell slightly to the lower 161 yen range in Tokyo, after U.S. employment-related data released Wednesday indicated a potential slowdown in the labor market, raising expectations the Federal Reserve is on track to cut interest rates soon.

Stocks were buoyed by exporters as expectations for favorable corporate profits grew ahead of the earnings season in the wake of the yen's recent depreciation, with the Japanese currency continuing to slide over the past three months to hit 37-year lows against the dollar.

A weaker yen boosts the overseas profits of exporters when repatriated.

"The lack of intervention by Japan's Finance Ministry has contributed to a sense of security in the market, which has interpreted it as authorities accepting the rate of around 160 yen to the dollar," said Shingo Ide, chief equity strategist at the NLI Research Institute.

The market was also supported by gains in banks and other value stocks, which have become more attractive amid the recent rise in long-term Japanese interest rates, Ide added.

The Topix index surged in early trading to renew its record high for the first time in around 34 years, while the Nikkei extended gains in the afternoon as foreign investors entered the fray, analysts said.

© KYODO