Nikkei Rises Most This Month on U.S. Debt Deal Prospects, Apple Earnings

Japan’s Nikkei 225 Stock Average rose by the most this month on optimism U.S. lawmakers will reach a deal to avoid a default on the government’s debt and after Apple Inc. (AAPL)’s profit topped estimates, boosting the earnings outlook for its suppliers.

Honda Motor Corp., which counts North America as its largest market, climbed 1.3 percent. Fanuc Corp. (6954), which makes machine tools used to manufacture the iPhone, advanced 3.9 percent. Teijin Ltd. (3401), a maker of fibers used in products from airplanes to bras, climbed 0.8 percent after the Nikkei newspaper said first-quarter profit jumped 60 percent.

The Nikkei 225 rose 1.2 percent to 10,005.90 at the 3 p.m. close in Tokyo, the most since June 29. The broader Topix index gained 0.8 percent to 860.66, with nine stocks advancing for every five that fell.

“The U.S. government looks like it’s moving forward to solve the debt issue,” said Junichi Misawa, head of equity investment at Tokyo-based STB Asset Management Co. “That’s taken a psychological weight off investors.”

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today as Apple’s profit topped estimates on record iPhone and iPad sales. The index rose 1.6 percent yesterday as President Barack Obama endorsed a deficit-reduction plan.

‘Significant Step’

Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could end a congressional deadlock over raising the U.S. borrowing limit. The news spurred optimism lawmakers will reach an agreement that will help the nation avoid default.

The plan is “a very significant step,” Obama said.

Honda climbed 1.3 percent to 3,185 yen. Toyota Motor Corp. (7203), the world’s largest carmaker, gained 0.6 percent to 3,325 yen. Kyocera Corp. (6971), a maker of solar panels which gets 17 percent of its revenue in the U.S., advanced 2.1 percent to 8,300 yen.

Stocks also got a boost from a report that housing starts in the U.S. rose more than forecast in June to the highest level in five months. Work began on 629,000 houses, a 15 percent increase from May, the Commerce Department reported yesterday. The level of starts exceeded the most optimistic forecast in a Bloomberg News survey of economists. Building permits, a sign of future construction, unexpectedly climbed 2.5 percent.

Apple Suppliers

Companies whose products are used to make Apple devices rose after the California-based firm posted profit that beat estimates. Fanuc jumped 3.9 percent to 14,460 yen. Toshiba Corp. (6502), a maker of memory chips used to store songs and photos in the iPhone, advanced 2.7 percent to 413 yen.

Apple, the world’s biggest technology company by market value, reported profit in the third-quarter increased to $7.79 a share from a year earlier, exceeding the $5.87 predicted by analysts on average. Sales climbed 82 percent to $28.6 billion.

Inpex Corp. (1605), Japan’s largest energy exploration company, increased 1.9 percent to 600,000 yen. Japan Petroleum Exploration Co. (1662), the second-biggest oil driller, gained 1.2 percent to 3,945 yen.

Crude oil for August delivery climbed 1.6 percent to $97.50 a barrel in New York yesterday, the highest settlement since July 13. Better-than-expected housing starts in the U.S. helped boost confidence fuel demand will recover in the world’s biggest oil-consuming country.

Carbon-fiber maker Teijin climbed 0.8 percent to 370 yen. Net income jumped 60 percent to about 6.5 billion yen ($82 million) in the April-June period, compared with a year ago, the Nikkei newspaper reported today, without saying where it got the information. Demand increased for materials used in sporting goods and auto parts, according to the report.

Among stocks that fell, Dainippon Screen Manufacturing Co., a maker of chip equipment, declined 1.4 percent to 630 yen. The company had its rating cut to “underweight” from “neutral” at JPMorgan Chase & Co.

Falling orders at Tokyo Electron Ltd. and ASML Holding N.V., other makers of gear used to make semiconductors, suggest bookings for Dainippon’s wafer cleaning systems will also drop, JPMorgan analyst Hisashi Moriyama said.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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