TOKYO - Tokyo stocks rose to a fresh six-month high on Tuesday morning, as strong earnings from the likes of Nissan Motor Co suggested Corporate Japan has managed to weather a recent rise in the national sales tax.
The Nikkei gained 0.5 per cent to 15,612.66 in mid-morning trade, the highest level since January 23.
Nissan jumped 4.5 per cent and was the second-most traded stock by turnover after the automaker's April-June operating profit rose a higher-than-expected 13.4 per cent to 122.6 billion yen ($1.20 billion).
Market players said that investors were trading on individual news, mainly linked to Japan's earnings season as they gauge the impact of a national sales tax hike in April.
"We are focused on whether manufacturers have ridden out the impact of the April tax hike, and there are signs that the prospects for companies aren't too bad," said Hiromichi Tamura, chief strategist at Nomura Securities.
Some analysts have worried that the tax hike could derail Japan's economic recovery, though recent data indicate the impact on growth has been smaller-than-feared.
Measuring instrument maker Keyence Corp jumped 5.0 per cent after its operating profit for the April-June period soared 34.6 per cent to 36.4 billion yen.
Industrial robort maker Fanuc Corp took a breather following a strong run after reporting upbeat quarterly earnings last week.
The stock was off 0.4 per cent.
The signs of improved domestic earnings offset concerns over soft economic data from the United States.
On Monday, an index of pending home sales in the US unexpectedly fell 1.1 per cent in June, the National Association of Realtors said.
"The market is not overly worried about yesterday's weak US housing data.
The main event investors are focused is US jobs data and how its long-term interest rates move," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
"If strong jobs data boosts the dollar to rise well above 102 yen, we may see more buying in global cyclical exporter stocks in Japan," he said.
The dollar traded at 101.85 yen on Tuesday morning.
Exporters were mixed, with Hitachi Ltd rising 1.4 per cent, Toshiba Corp shedding 0.9 per cent, and Toyota Motor Corp rising 0.1 per cent.
The broader Topix rose 0.3 per cent to 1,289.83, while the JPX-Nikkei Index 400 gained 0.3 per cent to 11,746.70.