Nikkei produces solid rise despite strong yen; financials higher

From Reuters - February 14, 2018

* Volatility may persist for some time - fund manager

* Short-term investors seen unwinding sell positions in Japan stocks

By Ayai Tomisawa

TOKYO, Feb 15 (Reuters) - Japans Nikkei share average rose significantly on Thursday morning as investors bought back recently-battered stocks after U.S. markets climbed overnight, shrugging off stronger-than-expected inflation data.

The Nikkei advanced 1.6 percent to 21,497.83 in midmorning trade, after tumbling to a four-month low on Wednesday and briefly dipping below its 200-day moving average.

All sectors but utility were in positive territory, with financial stocks and exporters outperforming, downplaying a strong yen trend.

The dollar dropped below Wednesdays nadir of 106.725 yen and fell to as low as 106.42 yen, its weakest level since November 2016.

If you are a logical investor, youd buy when you think stocks will rise and youd sell when you think stocks will fall. But todays trade is not based on logic, said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Short-term investors like overseas hedge funds were shorting Japanese stocks and futures since late January. They have their trades programmed to sell Japanese stocks when U.S. stocks fell. But since U.S. stocks rose overnight, they had to close such positions as there was a risk of losing.


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