Nikkei bid by stimulus hopes

Nikkei closed 1% up gettingĀ  closer to my first target of 10.000. Markets hope that the Bank of Japan (BoJ) will announce some kind of monetary stimulus after this week’s policy meeting. The new government seems to be pushing for more monetary stimulus, too. As a result the Yen has made a 20-month low vs the USD, which is very positive for exporters such as Toyota, canon and Hitachi.

Given that the 10.000 mark will be tested and surpassed in the next trading sessions I am looking for some more upside to about 10.250 which would be a new high for 2012. Traders who have long positions should take profits there.

In my opinion, this week’s market take of the BOJ meeting will show the way not only for the last 2 weeks of the year, but more importantly for the next months for the Nikkei and individual Japanese stocks.

As long as no negative news come out of Europe or the US, stock prices of Japanese exporters will benefit further. It is not only about market sentiment, but about company revenues. Keep in mind how these exporters suffer when the US or European consumer cannot buy their products.

Nikkei has been up by 18% in 2012, not a bad performance for the index of a country plagued by deflation. Renewed BoJ and government actions to fight deflation will be the key for this economy in 2013.

Petros