Nikkei Rises to Highest Since 2008 as Yen Buoys Exporters

Japanese shares gained, with the Nikkei 225 (NKY) Stock Average rising to its highest since 2008, after the yen weakened in overnight trading, boosting the outlook for exporters as earnings season starts.

JFE Holdings Inc. jumped 6.6 percent after the steelmaker posted a 28-fold jump in fourth-quarter profit, helped by a weaker yen and cost cuts. Tosoh Corp. surged for a second day after the chemical producer’s net income was double its forecast. Toyota Motor Corp., the world’s biggest carmaker, gained 2 percent. Fujitsu (6702) Ltd. dropped the most on the Nikkei 225 after Goldman Sachs Group Inc. cut its outlook on the stock.

The Nikkei 225 added 2.3 percent to close at 13,843.46 in Tokyo, climbing to its highest since June 2008. Volume was 20 percent above the 30-day intraday average. The Topix Index (TPX) rose 1.8 percent to 1,164.35, with about seven shares rising for every each that fell on the 1,698-member gauge.

“A lot of the expectation for exporter earnings has been priced in, but forecasts are still conservative,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 10.2 trillion yen ($102 billion). “Because companies are basing their forecasts on the assumption that the yen is near 80, we could see some big changes for this coming year.”

The Topix advanced 61 percent since mid-November as Prime Minister Shinzo Abe and central bank Governor Haruhiko Kuroda pledged to defeat 15 years of deflation. The gauge trades at 1.3 times book value compared with 2.3 for the Standard & Poor’s 500 Index and 1.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nintendo, Canon

Nintendo Co. and Canon Inc. are among more than 20 companies on the Topix that report earnings today, according to data compiled by Bloomberg. Of the 69 companies that have posted results so far this month and for which Bloomberg has estimates, 45 percent beat expectations, while 55 percent fell short, the data show.

JFE, which gets about 38 percent of its revenue outside of Japan, jumped 6.6 percent to 2,094 yen today after reporting 17.6 billion yen in profit for the three months ended March 31, compared with 635 million yen a year earlier after increasing cost cutting measures.

Tosoh jumped 10 percent to 310 yen, the third biggest gain on the Nikkei 225, extending yesterday’s 7.7 percent advance. Tosoh said its net income of 16 billion yen for the year ended March 31 was double its forecast, helped by the yen’s slide.

Yen

The yen fell ahead of a Bank of Japan policy decision on April 26. The central bank may upgrade its outlook on consumer- price gains excluding fresh food to at least 1.5 percent from 0.9 percent for fiscal 2014, according to people familiar with the central bank’s discussions.

Exporters gained. Toyota, which gets 25 percent of its sales from North America, rose 2 percent to 5,620 yen, the biggest boost to the Topix Index. Honda Motor Co., which gets 81 percent of its sales abroad, advanced 1.9 percent to 3,950 yen. Canon Inc., the world’s biggest camera maker, climbed 1.3 percent to 3,840 yen.

Fujitsu declined the most on the Nikkei 225 after Goldman Sachs reduced its investment rating on the stock to sell from neutral.

The Nikkei Stock Average Volatility Index gained 1.1 percent to 25.64 today, indicating traders expect a swing of about 7.4 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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