Japan Shares Rise as Steelmakers, Shippers Lead Advance

Japanese shares rose, with the Topix (TPX) index extending its longest winning streak in seven weeks, as steelmakers and shippers led gains on the gauge.

Tokyo Steel Manufacturing Co. surged 8 percent after Bank of America Merrill Lynch raised its rating on the stock. Shipping lines advanced for a second day as a measure of freight prices reached its highest in 21 months. Honda Motor Co., which gets 46 percent of its revenue from North America, jumped 2.3 percent as data showed sales to the U.S. surged. Railway operator Kintetsu Corp. lost 0.8 percent after saying it plans to raise as much as 67.1 billion through a share sale.

The Topix climbed 0.1 percent to 1,157.84 at the close of trading in Tokyo, after swinging between gains of as much as 0.6 percent and losses of as much as 0.4 percent. The Nikkei 225 Stock Average rose less than 0.1 percent to 14,064.82. The Federal Reserve said yesterday the world’s biggest economy maintained a “modest to moderate” pace of growth. The U.S. reports jobs data tomorrow.

“A lot of the optimism for the U.S. economy has been priced in, and now investors are on the sidelines until the employment data,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about $33 billion in assets. “Shippers are rising on higher cargo prices amid optimism Europe’s economy has bottomed and exports to China are recovering.”

Futures on the Standard & Poor’s 500 Index were little changed today after the measure gained 0.8 percent yesterday. The U.S. economy continued to grow from early July through late August, even as borrowing costs increased, the Fed said. The central bank’s Beige Book survey of economic conditions showed consumers spent more on travel and tourism, while manufacturing expanded “modestly.”

Steelmakers Gain

Japanese stocks have already priced in most available good news, such as the strengthening U.S. economy and Japan’s possible win in the race to host the 2020 Olympics, said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “Now investors want to take a wait-and-see approach.”

The Topix Iron & Steel Index climbed 2.5 percent today for the biggest advance among the 33 Topix industry groups.

Tokyo Steel Manufacturing led gains, jumping 8 percent to 557 yen, after its shares were raised to buy from neutral by Bank of America Merrill Lynch. Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steel producer by market value, advanced 3.6 percent to 313 yen after it was boosted to buy from underperform by the brokerage.

The companies’ ratings were increased amid optimism for a recovery in domestic demand from automakers and construction companies and an expansion in manufacturing in China, analyst Takashi Enomoto wrote in a report dated yesterday.

Shippers Climb

Shippers posted the second-biggest advance on the Topix today, with a gauge tracking the sector rising to its highest level since May 22. The Baltic Dry Index (BDIY) of commodity-shipping prices rose 4 percent yesterday to 1,215, its highest level since January 2012, according to the Baltic Exchange in London, a publisher of costs on more than 50 trade routes.

Japan’s three largest maritime transporters all climbed. Kawasaki Kisen Kaisha Ltd. jumped 3 percent to 239 yen, Mitsui O.S.K. Lines Ltd. rose 2.2 percent to 425 yen and Nippon Yusen K.K. added 1.7 percent to 301 yen.

Carmakers provided the biggest boost to the Topix. The sector advanced as data showed U.S. auto sales rose 17 percent last month. Toyota Motor Corp. deliveries surged 23 percent, while Honda and Nissan Motor Co. each had their best August.

BOJ Meeting

Honda jumped 2.3 percent to 3,760 yen. Toyota, which gets about 30 percent of sales from North America, climbed 0.3 percent to 6,250 yen. Nissan rose 0.6 percent to 1,019 yen.

The yen traded in a range from 99.57 to 99.98 per dollar as the Bank of Japan concluded a two-day policy meeting today.

The BOJ, which buys more than 7 trillion yen ($70 billion) of Japanese government bonds every month in its bid to stoke inflation to 2 percent, kept its policy unchanged. All 32 economists in a Bloomberg News survey forecast the outcome. The central bank also raised its assessment of Japan’s economy, saying a moderate recovery is underway.

Among stocks that fell, Kintetsu lost 0.8 percent to 369 yen. The Osaka-based company expects proceeds of 67.1 billion yen from selling shares to the public for 360 yen each.

The Topix traded at 1.21 times book value today, compared with 2.43 for the S&P 500 and 1.70 for the Stoxx Europe 600 Index yesterday. The Japanese measure’s 30-day historic volatility was at 28.80 today, compared with its five-year median of 19.42.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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