Japanese Stocks Advance First Time in Six Days on Earnings Outlook, Yen
Japanese stocks gained for the first time in six days after U.S. companies raised earnings forecasts, the yen weakened and commodity prices advanced.
Canon Inc., a camera maker that gets about 80 percent of its sales outside Japan, gained 3 percent after the euro strengthened. Komatsu Ltd. jumped 3.9 percent after Caterpillar Inc., the world’s largest maker of construction equipment, raised its full-year earnings outlook. Mitsubishi Corp., Japan’s biggest commodities trader, gained 3.9 percent and Inpex Corp., the nation’s largest oil and gas explorer, gained rallied 4.6 percent.
“Companies’ earnings are good at the moment in the U.S. as well as Japan,” said Masaru Hamasaki, chief strategist in Tokyo at Toyota Asset Management Co., which oversees about $15 billion. “Investors’ sentiment isn’t fixed. It changes according to the news of the day.”
The Nikkei 225 Stock Average jumped 1.7 percent to 9,379.74 as of 12:48 p.m. in Tokyo. The broader Topix gained 1.4 percent to 837.29, with more than seven times as many shares advancing as declining.
As of yesterday, the gauge has slumped 17 percent from this year’s high on April 15 as Europe’s debt crisis and China’s steps to curb property prices fueled concern that global economic growth will slow. Speculation the U.S. economy will contract intensified amid reports that manufacturing and home sales declined.
Companies in the Topix trade at 16.2 times estimated earnings on average, compared with 13.3 times for the Standard & Poor’s 500 Index and 11.8 times for the Stoxx Europe 600.
Earnings in U.S. and Japan
Futures on the S&P 500 increased 0.1 percent today. In New York yesterday, the index jumped 2.3 percent, the most in two weeks, after companies including United Parcel Service Inc. and AT&T Inc. boosted profit forecasts.
UPS, the world’s largest package-delivery company, raised its annual profit forecast, saying the U.S. economy will continue to recover. AT&T Inc., the largest U.S. phone company, reported second-quarter profit that beat analysts’ estimates as customers bought wireless devices such as Apple Inc.’s iPhone.
“Company earnings aren’t bad in the U.S. as well as in Japan,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Investors will focus on the favorable fundamentals and buy shares as they have been too pessimistic.”
Canon, a camera maker that counts Europe as its biggest market, rallied 3 percent to 3,430 yen. Industrial robot maker Fanuc Ltd., which earns about 80 percent of its revenue overseas, jumped 5 percent to 10,260 yen, the largest contributor to Nikkei 225 gains. Nissan Motor Co., which makes more than 75 percent of its revenue abroad, advanced 2.3 percent to 621 yen.
Makers of electronics and cars were the biggest contributors Topix gains among the gauge’s 33 industry groups.
Weaker Yen
The yen weakened to as low as 112.67 against the euro, from 110.52 after a report showed Europe’s manufacturing and services industry unexpectedly accelerated in July. The yen depreciated to as low as 87.24 against the dollar today in Tokyo from 86.48 at yesterday’s close of stock trading, boosting the value of overseas income at Japanese companies when repatriated.
Komatsu advanced 3.9 percent to 1,789 yen, and Hitachi Construction Machinery Co. gained 3.9 percent to 1,774 yen. Caterpillar raised its full-year earnings forecast on higher demand in developing countries for mining, energy and rail equipment. Also, Komatsu Chairman Masahiro Sakane yesterday said the company may further raise its earnings forecast for this fiscal year “so long as China doesn’t collapse.”
Mitsubishi, which gets about half its sales from commodities, rose 3.9 percent to 1,894 yen. Sumitomo Corp., Japan’s third-biggest trading company by market value, increased 2.4 percent to 912 yen. Inpex, the nation’s largest oil and gas explorer, surged 5.5 percent to 414,500 yen and closest rival Japan Petroleum Exploration Co. rose 2 percent to 3,495 yen. Oil companies gained the most among the Topix’s industry groups.
Crude oil for September delivery rallied 3.6 percent in New York yesterday, the biggest increase since May 27. The London Metal Exchange Index, a measure of six metals including copper and zinc, rose 2.3 percent yesterday, a fourth day of gains.
-- With assistance from Kotaro Tsunetomi. Editors: Sam Waite, Jim McDonald
To contact the reporters for this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net;
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