Japanese Stocks Advance as Fed Boosts Stimulus Measures

Japan stocks rose, with the Nikkei 225 (NKY) Stock Average reaching a three-week high, after the Federal Reserve said it will buy mortgage-backed securities to boost growth in the world’s biggest economy.

Canon Inc., a camera maker that gets 27 percent of sales in the Americas, rose 3.6 percent. Sumitomo Metal Mining Ltd. (5713), Japan’s biggest gold producer, led gains on the Nikkei 225 as bullion and copper jumped after the Fed’s announcement. Seven & I Holdings Ltd. fell 2.4 percent on a Nikkei newspaper report that the convenient-store operator will miss its operating profit forecast.

The Nikkei 225 gained 1.8 percent to 9,159.39 at the 3 p.m. close of trading in Tokyo, bringing this week’s advance to 3.2 percent. Nikkei 225 futures and options contracts for September delivery, also known as the “special quotation,” settled at 9,076.79. The broader Topix Index (TPX) climbed 1.7 percent to 756.88, with volume and trading value rising the most since March.

“It’s a fantastic time to be investing in the Japanese markets,” Ed Rogers, chief executive officer at Tokyo-based Rogers Investment Advisors, which invests in funds of hedge funds, said in a Bloomberg TV interview with Zeb Eckert. “For Japan it means as soon as the U.S. can help repair the finances of consumers, the better it is for Japan.”

The Topix dropped 13 percent from this year’s peak on March 27 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 2.3 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.

Economic Assessment

Shares gained even after the government said Japan’s recovery from last year’s record earthquake may be stalling amid the global slowdown, according to a monthly economic assessment released by the Cabinet Office today. The report cited a second month of falling personal consumption and industrial output, and cut its outlook for capital spending and earnings going forward.

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The index jumped 1.6 percent in New York yesterday to its highest close since the end of 2007, after the Fed said it will conduct open-ended purchases of $40 billion of mortgage debt a month to help fight unemployment stuck at 8 percent since February 2009.

The central bank will continue buying mortgage-backed securities and undertake other asset purchases if the outlook for the labor market doesn’t improve substantially, the Federal Open Market Committee said yesterday. It also said it would probably hold the federal funds rate near zero “at least through mid-2015.”

Canon gained 3.6 percent to 2,783 yen. Komatsu Ltd. (6301), a construction-equipment maker that gets 23 percent of sales in the Americas, climbed 4.5 percent to 1,681 yen.

Yen’s Rise

Japan’s Finance Minister Jun Azumi said the government is ready to take “decisive” action against unacceptable swings in the yen’s value after the currency strengthened to a seven-month high against the dollar following the Fed’s announcement.

Commodities climbed after on speculation the added U.S. stimulus will boost demand. Gold rose to its highest level since February, while copper jumped as much as 3.5 percent on the London Metal Exchange, the highest since May 2. Crude also rose to a four-month high, with futures rising 0.8 percent in New York to erase declines for the year.

Sumitomo Metal Mining rose 9.4 percent to 1,010 yen, the biggest gain since 2009. Inpex Corp., Japan’s biggest oil explorer, surged 5.9 percent to 485,000 yen.

Among declining shares, Seven & I lost 2.4 percent to 2,323 yen. The Nikkei reported the company is expected to post first- half operating profit of 147 billion yen, a 2 percent decline from a year earlier.

The Nikkei Stock Average Volatility Index (VNKY) declined 1.8 percent to 18.93, indicating that traders expect a swing of about 5.4 percent over the next 30 days.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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