July 23 (Reuters) – Japan’s Nikkei surged 2.8 percent and was set to snap a five-day losing streak on Friday, boosted as worries about the results of European bank stress tests eased and by robust U.S. corporate earnings.
Short-covering helped buoy the benchmark Nikkei after it shed nearly 6 percent in the past five days, market players said, with the pace picking up in the afternoon amid thin trade.
Charts grew brighter as the Nikkei pulled away from oversold territory, with the benchmark’s slow stochastic — a measure of how oversold the market is and whether it is in a short-term up or down trend — edging higher after a bullish cross on Thursday.
But market players remained wary.
“This jump is mainly coming from short-covering, it’s not a move that will really lead the Nikkei sharply higher,” said Kenichi Hirano, operating officer at Tachibana Securities.
“But if we manage to close at this level, we may be set for more gains next week. And while it’s probably not good to be over-optimistic, I think the stress test results are unlikely to be that harsh.”
The benchmark Nikkei .N225 rose 251.98 points to 9,472.86, while the broader Topix rose 2.3 percent to 844.10.
Semiconductor related shares rose in the wake of gains by their U.S. peers on Thursday, with the Philadelphia Semiconductor Index .SOXX rising more than 3 percent.
Microsoft Corp (MSFT.O) also reported a 48 percent rise in quarterly profit after the bell, easily beating Wall Street forecasts, though it failed to match chipmaker Intel Corp’s (INTC.O) strong optimistic tone last week. [ID:nN21206486] [ID:nN12197658]
Chip-tester maker Advantest Corp (6857.T) rose 2.1 percent to 1,916 yen, chip equipment maker Tokyo Electron (8035.T) gained 3.6 percent to 4,695 yen, and stepper maker Nikon (7731.T) climbed 3.5 percent to 1,514 yen.