Japan Stocks Advance Before Fed Meeting; Utilities Climb

Japanese stocks advanced, with the Nikkei 225 (NKY) Stock Average closing at a two-week high, as investors awaited the end of a U.S. Federal Reserve meeting. Shippers led gains on prospects for higher rates to Europe.

Nippon Yusen K.K., Japan’s top shipping line by sales, jumped 4.5 percent. Kansai Electric Power Co. gained on a report the utility is seeking a household rate hike. TDK Corp. (6762), a battery supplier to Apple Inc. (AAPL), climbed 3.7 percent after the iPhone 5 was unveiled. Itochu Corp. (8001) added 0.8 percent after the trading company said it was in talks to buy Dole Food Co.’s packaged-foods business and a unit in Asia.

The Nikkei 225 rose 0.4 percent to 8,995.15 at the 3 p.m. close in Tokyo, with trading volume 16 percent below the 30-day average as investors wait on signs of a third round of asset purchases from the Fed. The broader Topix Index (TPX) gained 0.3 percent to 744.23, after falling as much as 0.4 percent earlier.

“Markets are slightly nervous in anticipation of quantitative easing,” Lim Say Boon, chief investment officer at DBS Private Bank, said on Bloomberg Television in Singapore. “If we get QE3 then the markets, beyond this period of nervousness, are likely to rally even further.”

The Topix dropped 15 percent from this year’s peak on March 27 through yesterday on concern Europe’s debt crisis is deepening and as growth slows in China and the U.S. The gauge trades at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index. A number below one means companies can be bought for less than the value of their assets.

Today is the last trading day for the Nikkei 225 futures and options contracts for September delivery before their prices get fixed tomorrow in a settlement known as the special quotation.

Fed Stimulus

Futures on the S&P 500 slid 0.2 percent today. The gauge rose 0.2 percent yesterday in New York after Germany’s high court cleared the way for Europe’s bailout fund and on investor optimism for additional stimulus measures from the Fed.

The U.S. central bank will probably announce a third round of bond purchases, according to almost two-thirds of economists in a Bloomberg survey. The central bank will also likely commit to hold interest rates close to zero into 2015, the survey showed.

Apple suppliers gained after the company unveiled the iPhone 5 yesterday. The new version boasts a bigger screen, faster processor and access to speedier wireless networks, an overhaul aimed at gaining share in the $219.1 billion smartphone market.

iPhone Suppliers

TDK gained 3.7 percent to 3,075 yen. Murata Manufacturing Co., which supplies capacitors for Apple’s smartphone, added 2.9 percent to 4,145.

“Before the iPhone 5 was introduced, investors were worried that consumers wouldn’t trade up to the new version,” said Seiichiro Iwamoto, who helps oversee about $35 billion at Mizuho Asset Management Co. in Tokyo. “But confidence is growing because it’s a good-looking product, and this is boosting companies that supply parts to Apple,”

Shipping lines gained the most among the Topix’s 33 industry groups after Orient Overseas International Ltd. said it will boost North Europe-Asia charges by $200 per container.

Nippon Yusen soared 4.5 percent to 140 yen. Mitsui O.S.K. Lines Ltd. surged 6.7 percent to 192 yen. Kawasaki Kisen Kaisha Ltd climbed 6.3 percent to 101 yen.

The news “may prompt investors to buy back shippers’ shares as they had been oversold,” said Yusuke Aramaki, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co. “I think the container market may become firm but the Baltic Dry may keep slumping.”

Shipping Stocks

Shipping lines were the biggest decliners on the Topix over the past 12 months. The Baltic Dry Index (BDIY), a gauge of shipping costs, fell for an eleventh day, near the lowest level since July 1986 on a monthly basis

Utilities gained on Kansai Electric’s plans to seek government approval to raise household power rates more than 10 percent, according to a Yomiuri newspaper report that cited no sources.

Kansai Electric surged 9.3 percent to 543 yen. Kyushu Electric Power Co. gained 9.5 percent to 509 yen.

Itochu rose 0.8 percent to 806 yen after the third-largest trading house in Japan said it was negotiating to buy Dole Food’s global processed food unit as well as its fruit and vegetable business in Asia. Itochu expects to complete the deal around November, the Tokyo-based company said today in a statement. The deal may be worth $1.7 billion, the Nikkei newspaper reported today without citing anyone.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.

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

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