TOKYO, May 10 — Tokyo stocks edged higher Tuesday, with the key Nikkei stock index rising 0.25 percent as robust earnings from bellwethers like Toshiba and a comparatively soft yen compared to recent days, offset concerns about debt-plagued Greece.
Concerns about sovereign debt contagion in the single currency eurozone reemerged after officials agreed to review the terms of Greece’s bailout, with top officials saying late on Friday that Greece needed a “further adjustment program” to tackle its deteriorating debt crisis.
With this news however, investor fears grew as if Athens were looking at getting concessions, the same should be applicable to Dublin, as an Irish minister pointed out.
Ratings agency Standard & Poor’s cut Greece’s credit rating by two levels to B from BB minus, stating further reductions are possible as the risk of missed repayments grows more likely.
In addition Moody’s Investors Service said that Greece’s credit rating was currently under review.
Hence, as the yen strengthened against its European counterpart on the latest eurozone woes, the market retreated further into negative territory, proving how volatile even slight fluctuations in currency markets can be.
“As there is a lack of an overall direction in the market, a slight shift in currency rates can tip the Nikkei in either direction,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
The 225-issue Nikkei Stock Average added 24.38 points from Monday to 9,818.76, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 3.25 points, or 0. 38 percent, to finish at 856.46.
Investor sentiment was given a boost however, amid a day of largely directionless trade as only companies with strong earnings figures and outlooks are opting to report — leaving market players with a lot of head scratching to do — as a report in a prominent daily said that Toshiba would be looking to augment its profits due to the ever-growing popularity of smartphones and tablet devices and its staple businesses also looked set to turn a healthy profit. Subsequently, Toshiba gained 3.7 percent on the news to close at 451 yen.
Sumitomo Heavy Industries was also in the headlines Tuesday, surging 12 percent to 597 yen, following the company announcing it expects its operating profit in fiscal 2011 to rise 18 percent on year to 54 billion (671 million U.S. dollars).
The firm also got a boost by Goldman Sachs raising its target price on the stock to 680 yen from 650 yen. Sachs also maintained its “buy” rating on the stock.
“Earnings are gradually improving day by day, and that’s being reflected in the stock market,” said Seiichiro Iwamoto, at Mizuho Asset Management Co.
Adding to a slightly brighter mood in the afternoon session, news that Toyota Motor’s production will likely return to normal two or three months earlier than expected, sent shares in the world’s largest automaker up 1.7 percent to finish the day at 3, 250 yen, with all eyes now on Toyota’s earnings results for fiscal 2010 due out on Wednesday.
“The Toyota news likely triggered the jump in the afternoon session,” said Toshikazu Horiuchi, equity strategist at Cosmo Securities Co.
“Since the auto industry is a major sector, the view that its earnings would not tumble as expected after the March 11 earthquake and tsunami led to the rise,” he added.
Trading volume on Tuesday rose to 1.90 billion shares on the Tokyo Exchange’s First Section, up from Monday’s volume of 1.69 billion shares, with advancing issues outnumbering declining ones by 932 to 589.