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Japanese Stock Futures Rise as Comments Weaken Yen

Japanese stock futures rose after incoming prime minister Shinzo Abe reiterated he will consider revising the law governing the central bank if it fails to set a higher inflation target next month. The remarks pushed the yen to a 20-month low against the dollar.

American depositary receipts of Nissan Motor Co. (7201), Japan’s second largest carmaker by revenue, rose 2.6 percent from the closing share price in Tokyo. Those of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, added 2.3 percent. ADRs of Sony Corp. (6758) advanced 2.2 percent as the electronics maker is in talks to sell its battery business to Japan’s state-backed investment fund, according to a person with direct knowledge of the matter.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in March closed at 10,145 in Chicago yesterday, up from 9,960 in Osaka, Japan on Dec. 21. They were bid in the pre-market at 10,110 in Osaka, at 8:05 a.m. local time. Japan’s markets were closed yesterday for a public holiday.

“The yen has extended losses on the back of Abe’s comments,” said Toshiyuki Kanayama, a market analyst at Tokyo- based Monex Inc. “Exporters, especially auto and high-tech shares, are going to be bought as investors expect better currency margins. With conditions improving, financial shares are likely to keep playing catch-up and we will see a rally across the board.”

Inflation Target

Abe said he will consider revising the law governing the nation’s central bank if it fails to set an inflation target of 2 percent at its January meeting. Abe spoke on Dec. 23 on Fuji Television. The yen touched 84.96 per dollar today, the lowest since April 2011. A weaker yen boosts the value of overseas earnings at Japanese exporters.

Asian equity markets except for Japan, China, Taiwan, Thailand, Vietnam and Sri Lanka are closed for a holiday today.

The Standard & Poor’s 500 Index (SPXL1) dropped 0.2 percent in New York yesterday amid concern policy makers will fail to strike a budget compromise by year end to avoid more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff. Lawmakers plan to return to Washington on Dec. 27 to resume their negotiations.

The MSCI Asia Pacific Index (MXAP) gained 12 percent this year through yesterday as U.S. and Chinese economies recovered and central banks around the world took action to spur growth. The Asian benchmark trades at 14.5 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 12.7 times for the Stoxx Europe 600 Index.

The Bloomberg China-US Equity Index of the most-traded Chinese shares declined 0.7 percent to 95.72 in New York, after a shortened trading day yesterday for the Christmas holiday.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

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

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