TOKYO, July 14 (Reuters) – Japan’s Nikkei surged nearly 3 percent on Wednesday to shoot above a key resistance level, with chip-related shares powering higher after Intel results beat expectations, easing fears about the U.S. economic recovery.
In active trade, the benchmark climbed well past resistance at around 9,677, the level of its 25-day moving average, which it broke above for the first time in three weeks.
Resilient demand for personal computers and servers helped Intel Corp (INTC.O)’s margin and revenue forecasts, out after the bell, blast past expectations, allaying fears of a possible tech spending slowdown and setting an upbeat tone for the industry’s earnings season. [ID:nN12197658].
The announcement came on the heels of better-than-expected quarterly earnings from Alcoa (AA.N) the day before, giving heart to investors who had fled to the sidelines on jitters about the economic recovery. [.N]
“There’s been growing doubts about the health of the U.S. economy, but these better-than-expected Intel results have really changed sentiment in the market,” said Toshiyuki Kanayama, a market analyst at Monex Inc.
“Wall Street rose strongly, there was Intel, and the yen is also weaker. A lot of good factors for stocks are now lining up.”
The benchmark Nikkei .N225 surged 2.8 percent or 270.13 points to 9,807.36, while the broader Topix gained 2.3 percent to 874.19.
Market players said short-covering emerged after the Nikkei broke above its moving average and additional resistance on its daily Ichimoku charts at around 9,670 which was its kijun sen, an indicator of medium-term trends. Ichimoku charts are a popular charting method among Japanese traders.
The Nikkei also broke above the middle line of its Bollinger Bands, around 9,643, after being stuck below it for the past several trading days, while its MACD continued to rise.
But some in the market remained wary, noting that further rises could be hard to achieve.
“There’s selling of futures at around 9,800, and this is likely to cap gains for now,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
“Also, even though Intel may be good, there’s some concern about the bank earnings later this week, with good results for them necessary for the market to go much higher.”
JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) both announce this week.
An accumulation of long positions in the market, especially in blue-chip exporters, means that any further rises are likely to take time, Kanayama added.
The Nikkei’s next target is 10,000 and then around 10,250, the level of its June high.
Toyota Motor Corp (7203.T) and other carmakers surged, with Toyota up 4.6 percent to 3,270 yen and Honda Motor (7267.T) climbing 4.3 percent to 2,753 yen and the gains were seen as mainly due to a slightly weaker yen the boost in overall sentiment.
An analysis of dozens of data recorders from Toyota vehicles involved in accidents blamed on sudden acceleration suggests some drivers were at fault, according to the Wall Street Journal. [ID:nN1396064] But Kuramochi said he thought the Toyota recall issue had largely faded as a factor for the market.
Chip gear manufacturer Tokyo Electron (8035.T) and other tech shares gained after the Intel results, with Tokyo Electron shares climbing 3.9 percent to 5,100 yen.
Chip-tester maker Advantest Corp (6857.T) shot up 5.5 percent to 2,010 yen, and Nikon (7731.T), a maker of steppers, advanced 2.1 percent to 1,644 yen.
Shares of Komatsu (6301.T), the world’s No.2 construction machinery maker, shot up 6 percent to 1,799 yen after it lifted its full-year profit forecast by 14 percent, citing better-than-expected first-half sales in Asia and Latin America, as well as a pick up in demand in Japan and the United States. [ID:nTOE66C04V]