Japan Shares Climb to Three-Week High on U.S. Debt Deal

Japanese shares rose, with the Topix (TPX) index climbing to a three-week high, after the U.S. Congress voted to end the government shutdown and raise the debt ceiling, ending the nation’s fiscal impasse.

Nissan Motor Co., an automaker that gets 34 percent of sales in North America, added 2.2 percent. Kansai Electric Power Co. gained 2.8 percent after the utility reported preliminary profit that beat forecasts. Fujitsu Ltd. surged 5.7 percent after Goldman Sachs Group Inc. boosted its outlook on the computer-service provider. Sharp (6753) Corp. slid the most on the Nikkei 225 Stock Average after Deutsche Bank AG cut its price target on the TV maker.

The Topix gained 0.8 percent to 1,206.25 at the close in Tokyo, its highest since Sept. 27. All but three of the 33 subsectors climbed. The Nikkei 225 added 0.8 percent to 14,586.51. The yen strengthened 0.3 percent to 98.44 per dollar today after sliding 0.6 percent yesterday.

“At least one of the problems has been solved for now,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which has the equivalent of $360 billion in assets. “Investors who had sold their risk positions are now buying them back to a level where they can sit and hold for a while. But the consensus was for a resolution and it has largely been priced into stocks.”

Futures on the Standard & Poor’s 500 Index slipped 0.2 percent. The measure yesterday added 1.4 percent as the leaders of the Senate reached a bipartisan agreement to end the fiscal impasse and increase U.S. borrowing authority.

The House of Representatives today voted 285-144 to halt the 16-day government shutdown the day before U.S. borrowing authority was scheduled to lapse as lawmakers engaged in their fourth round of fiscal brinkmanship in less than three years. The Senate had earlier voted 81-18 in the deal’s favor. President Barack Obama has signed the bill, the White House said.

Borrowing Authority

If no solution had been reached, the U.S. would have exhausted its borrowing authority today and faced default, according to the Congressional Budget Office. Fitch Ratings put the world’s biggest economy on watch for a possible credit downgrade yesterday, citing lawmakers’ inability to agree.

“Investors who were waiting on the sidelines, as well as those who were short, will be buying shares again,” Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. “Many of the big-cap stocks are likely to be bought.”

Nissan, which counts North America as its biggest market for sales, gained 2.2 percent to 1,022 yen. Honda Motor Co., which gets about 80 percent of revenue abroad, added 1.2 percent to 3,950 yen. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank, advanced 1.1 percent to 637 yen.

Insurers Advance

The Topix Insurance Index rose 2.5 percent today, the most among the broader gauge’s 33 industry groups. Earnings in the sector may beat forecasts amid strong stock market conditions and a weaker yen, Mizuho Financial Group Inc. analysts Rie Nishihara and Yusuke Yabumoto wrote in a report yesterday. NKSJ Holdings Inc. climbed 3.2 percent to 2,585 yen. Sony Financial Holdings Inc. jumped 3.1 percent to 1,825 yen.

Kansai Electric, Japan’s biggest power producer by market value, advanced 2.8 percent to 1,327 yen, its highest level since Aug. 6. The company reported preliminary first-half net income of 15 billion yen, compared with its previous forecast for a 32 billion yen net loss.

Fujitsu gained 5.7 percent to 409 yen for the biggest advance on the Nikkei 225. The maker of semiconductor, computer and communication equipment was raised to buy from sell at Goldman Sachs with a target price of 480 yen.

Toko Climbs

Toko Inc., a maker of semiconductors and power supplies, rose 3.3 percent to 344 yen. Murata Manufacturing Co., a supplier of components to Apple Inc. and Samsung Electronics, may need to increase its 300-yen-a-share bid for Toko to ensure support for its offer, according to Lee Mitchell, a special situations sales trader at Religare Capital Markets Ltd. in Singapore. Murata added 0.9 percent to 7,590 yen.

Sharp declined 3 percent to 290 yen, the biggest drop on the Nikkei 225. Deutsche Bank, which maintained its sell rating on the company, cut its price outlook for the shares to 122 yen from 210 yen.

The Topix traded at 1.26 times book value today, compared with 2.53 for the S&P 500 and 1.77 for the Stoxx Europe 600 Index yesterday. Volume on the Japanese gauge was 25 percent below its 30-day average today. Its 30-day historic volatility was at 16.11 today, compared with its five-year median of 19.31.

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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