Nikkei posts biggest daily gain in two months

Japan's Nikkei average scored its biggest daily gain in two months on Wednesday with all sectors ending higher as global markets rallied on strong manufacturing data, robust US earnings and easing concerns over the Middle East. The Nikkei's rise exceeded many analysts' expectations as global macro hedge funds were detected covering short positions through large purchases of Nikkei futures, investors said.
Strong earnings from delivery firm UPS Inc and drugmaker Pfizer combined with solid manufacturing data to bolster investor confidence in the corporate sector's future profitability, lifting Wall Street to its highest since June 2008. "Yesterday's demonstration in Egypt ended relatively peacefully and the cost of insuring against a default by Egypt has decreased, showing investors are calming down a little," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Embattled Egyptian President Hosni Mubarak said on Wednesday that he would not seek re-election in balloting due in September but many analysts said that may not be enough for protesters who want him to leave immediately. And The benchmark Nikkei ended up 1.8 percent or 182.86 points at 10,457.36, the biggest daily gain since December 2. At one point it rose as high as 10,479.75, piercing resistance at 10,470.13, the Nikkei 225 options settlement in January. The broader Topix added 1.8 percent to 929.64.
Fujito noted that the US manufacturing data was the strongest since May 2004, when it was followed within a month by interest rate hikes and additional increases thereafter. This week marks the peak in Japan's corporate results reporting season for the October-December quarter, with investors looking for signs of a sustained recovery at blue chip firms. Mitsubishi Electric Corp surged 7.4 percent to 996 yen after its president told a results briefing there was a chance its full-year earnings estimate would be raised. The company retained its full-year outlook for an operating profit of 205 billion yen ($2.52 billion), slightly below an average estimate of 218.6 billion yen in a poll of 16 analysts by Thomson Reuters I/B/E/S.
Daiwa Securities, Japan's No 2 brokerage, jumped 4.9 percent to 427 yen after it reported its first profit in four quarters on Tuesday, as a rebound in Japanese share prices lifted fees from stock trading. Casio Computer surged 6.6 percent to 659 yen after it entered the black on an operating basis for the April-December period.
Casio, a leading digital watchmaker, said it posted an operating profit of 9 billion yen compared with an operating loss of 20.4 billion yen in the year-ago period. Trading volume reached its highest since January 21, with 2.4 billion shares changing hands on the Tokyo Stock Exchange's main board, well above last week's daily average of 1.9 billion. Advancing issues overwhelmed decliners by 1,400 to 170.