Japan Shares Rise as Yen Weakens Amid Debt-Deal Optimism

Photographer: Tomohiro Ohsumi/Bloomberg

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Photographer: Tomohiro Ohsumi/Bloomberg

A flag flies outside the Tokyo Stock Exchange building in Tokyo.

Japan’s Topix (TPX) index rose a third day as the yen fell on signs U.S. lawmakers may strike a deal to raise the debt ceiling and amid optimism the dollar will strengthen after Federal Reserve minutes indicated tapering of stimulus was likely this year.

Honda Motor Co., which gets almost half its sales in North America, advanced 2.5 percent. SoftBank (9984) Corp. climbed 1 percent, paring losses from the past two days. Rakuten Inc. slumped 2.6 percent after its equity rating was cut at Goldman, which said the e-commerce company will have to review fees after Yahoo Japan Corp. (4689) cut prices for online vendors. Fast Retailing Co., Asia’s largest clothing retailer, slipped 0.6 percent ahead of an earnings report that showed its profit forecast missed estimates.

The Topix rose 1 percent to 1,177.95 at the close in Tokyo, with more than twice as many shares advancing for each that fell on the 1,744-member gauge. Volume was about 18 percent below the 30-day average. The Nikkei 225 Stock Average gained 1.1 percent to 14,194.71.

“While there are still big concerns about the U.S. debt ceiling out there, investors think it won’t be an issue in the longer-term,” said Tomomi Yamashita, who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. “The Fed tapering looks likely to come sooner than expected, so I think the yen is at the tipping point of heading toward a weaker level. It’s not Japanese shares you need to be concerned about, so there’s relief there.”

Futures on the Standard & Poor’s 500 Index rose 0.5 percent. The measure yesterday climbed 0.1 percent after congressional aides said House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, the first movement toward averting a U.S. default. The U.S. government is in the ninth day of a partial shutdown, just over a week before U.S. borrowing authority lapses Oct. 17.

Fed Minutes

Most Federal Reserve policy makers said the central bank was likely to taper its bond purchases this year.

“Most participants viewed their economic projections as broadly consistent with a slowing in the pace of the committee’s purchases of longer-term securities this year and the completion of the program in mid-2014,” according to the record of the Federal Open Market Committee’s Sept. 17-18 gathering.

The yen fell 0.4 percent to 97.76 per dollar today, after rising to as much as 96.83 yesterday. Against the euro, Japan’s currency fell 0.2 percent to 131.92.

“Until we see the real signs of a breakthrough in the U.S. congressional stalemate, gains may be sluggish,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “There’s a lot of expectations that we’ll see Japanese companies revise up earnings. We’ll see investors chase the upside.”

Exporters Advance

Honda gained 2.5 percent to 3,885 yen. Toyota Motor Corp., Asia’s biggest carmaker, increased 1.9 percent to 6,350 yen. Nintendo Co., a gaming console maker that counts the Americas as its biggest source of sales, rose 2.3 percent to 11,250 yen.

SoftBank climbed 1 percent to 7,070 yen, the second-biggest support to the Nikkei 225. The shares yesterday fell 5.7 percent after the mobile carrier’s rating was cut at Citigroup Inc.

Japanese machinery orders for August, an indicator of future capital spending, rose 5.4 percent on the month, beating the 2.5 percent estimate of economists’ surveyed by Bloomberg.

Fanuc Corp., which gets 40 percent of its revenue from factory automation machinery, gained 2 percent to 16,010 yen, the biggest boost to the Nikkei 225. Hitachi Construction Machinery Co. added 1.4 percent to 2,119 yen.

Rakuten Drops

Among stocks that fell, Rakuten slumped 2.6 percent to 1,153 yen to cap an eight-day decline. The shares were cut to neutral by Goldman Sachs, citing likely pressure on the online mall after Yahoo Japan slashed fees for Internet retailers.

Fast Retailing (9983) lost 0.6 percent to 34,550 yen, the biggest drag on the Nikkei 225, ahead of an earnings release after the market close. The retailer forecast 92 billion yen in net income for the year ending August 2014, missing the 99.3 billion yen average estimate compiled by Bloomberg.

Earnings per share for companies on the Topix will rise 35 percent in the next 12 months, according to analyst estimates compiled by Bloomberg.

The Topix traded at 1.23 times book value today, compared with 2.44 for the S&P 500 and 1.71 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 17.81 today, compared with its five-year median of 19.32.

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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