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The Nikkei Rallies as the Yen Weakens, Margin Users Become the Most Bullish Since 2000

“…The Topix increased 1.8 percent to 1,171.84 at the close in Tokyo, with volume 22 percent below the 30-day average. The gauge climbed 9.6 percent over the past four trading days, the most since April 8. The Nikkei 225 Stock Average added 1.8 percent to 14,098.74.

“Earnings at Japanese companies are likely to beat estimates because their yen forecasts are pretty conservative,” said Kuninobu Takeuchi, Tokyo-based executive portfolio manager at DIAM Co., which oversees more than $124 billion globally. “The yen comes under selling pressure when risk sentiment improves globally.”

Today’s advance pares the Topix’s losses from an almost five-year high on May 22 to 8.2 percent. The gauge is up 36 percent this year amid optimism Japan may beat deflation and achieve sustainable growth.

Bullish Bets

Investors using borrowed money to trade Japanese stocks are the most bullish since 2000, signaling expectations the rally will continue. The number of Japanese shares bought through margin accounts that profit when stocks rise outnumbered those that make money during declines by about 7 to 1, the highest for 13 years, data compiled by Bloomberg show….”

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