Japan ETFs Jump Back Above Short-Term Trend Line

August 1st at 4:00pm by Tom Lydon

Japan-related exchange traded funds surged Thursday, climbing over their short-term trends, as the U.S. dollar appreciates against the yen currency and Japanese banks generate robust profits.

Hedged Japanese-equity ETFs that diminish the effects of a depreciating yen led fund moves Thursday, with the db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) rising 4.7%, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) gaining 4.3% and the WisdomTree Japan Hedged SmallCap Equity Fund (NYSEArca: DXJS) adding 3.6%. The unhedged iShares MSCI Japan ETF (NYSEArca: EWJ) rose 2.9%. Additionally, the Japan ETFs crossed over their 50-day simple moving averages.

The U.S. dollar strengthened 1.8% against the Japanese yen Thursday, trading at about 99.5 yen. The CurrencyShares Japanese Yen Trust (NYSEArca: FXY) gained 1.7% in late day trading. [Bearish Yen Forecasts Could Prove Bullish for DXJ]

The Nikkei 225 Index was 2.5% higher Thursday following reports that China’s manufacturing Purchasing Managers’ Index rose 0.2% in July. [Is Japanese Political Stability Good For Asian ETFs?]

Last week, the Cabinet Office announced that Japan, the world’s third-largest economy, showed signs of self-sustaining recovery, Bloomberg reports.

“The environment is improving for Japanese companies to expand capital spending,” Takeshi Kunibe, chairman of the Japanese Bankers Association, said in the article.

Japan’s three largest banks generated profits of $8.1 billion, or 791.6 billion yen, in the second quarter, a 63% increase year-over-year.

“The key is how to further encourage corporate and consumer sentiment, which will need the government to execute its growth strategies,” Kunibe, who is president of Sumitomo Mitsui’s banking unit, said in the article.

db X-trackers MSCI Japan Hedged Equity Fund

For more information on Japan, visit our Japan category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.