Japan Shares Rise as Yen Weakens After U.S. Jobs Data

Japanese shares rose, after the Topix (TPX) index capped a fifth week of declines, as the yen weakened following U.S. jobs data and ahead of Federal Reserve Chairman Janet Yellen’s first policy report to lawmakers.

Toyota Motor Corp., the world’s biggest carmaker, gained 1.6 percent. Ebara Corp. jumped 6.1 percent after the pumpmaker said profit increased 26 percent. Utilities declined after leading gains on Feb. 7 before weekend Tokyo gubernatorial elections that saw an anti-nuclear candidate defeated.

The Topix advanced 1.3 percent to 1,204.28 at the close of trading in Tokyo, with all but two of the gauge’s 33 subsectors gaining. The measure capped a fifth week of declines Feb. 7, the longest such streak since June 2012. The Nikkei 225 Stock Average added 1.8 percent today to 14,718.34. The yen fell 0.1 percent to 102.39 per dollar at the close, a third day of declines. The U.S. added fewer jobs than expected in January, while the employment rate dropped to the lowest in more than five years.

“The U.S. jobs data weren’t bad,” said Masaru Hamasaki, a Tokyo-based senior strategist at Sumitomo Mitsui Asset Management Co., which oversees about 11 trillion yen ($107 billion). “With good data like this, the Fed will be able to continue tapering. But it’s going to be a while before investors are able to chase new highs. It’s likely to be volatile for a while yet.”

Japanese stocks are the worst performers this year among 24 developed markets tracked by Bloomberg. Shares fell as the yen strengthened the most against the dollar since April 2012 in January, with investors shunning riskier assets amid concerns over a slowdown in China, a slump in emerging-market currencies and the Fed’s reduction of stimulus. The Nikkei 225 rose 57 percent in 2013, the most since 1972, as Prime Minister Shinzo Abe and the Bank of Japan took steps to end deflation.

U.S. Jobs

The U.S. added 113,000 jobs last month, a Feb. 7 report showed, trailing the median estimate of 180,000 in a Bloomberg survey. The jobless rate dropped to 6.6 percent, the lowest since October 2008. The Fed has been scrutinizing employment data to determine the timing and pace of further cuts to stimulus. The central bank last week said it will press on with a second reduction to its monthly bond buying, by $10 billion to $65 billion, citing an improvement in the labor market. Futures on the S&P 500 lost 0.1 percent today.

Toyota gained 1.6 percent to 5,994 yen, the second-biggest boost to the Topix. Mazda Motor Corp., which counts North America as its biggest market, rose 2 percent to 501 yen. Sharp Corp. (6753), which gets about 60 percent of revenue overseas, jumped 2.9 percent to 324 yen.

Positive Reaction

“If you look at the positive reaction by the markets to the U.S. jobs data, you can see the expectations for the economic recovery are strong as long as the effects of the cold weather go away,” said Ryuta Otsuka, a Tokyo-based strategist at Toyo Securities Co. “The Tokyo governor election results reduce the risk of rising energy costs as there’s less concern about Japan pursuing a no-nuclear-plant policy.”

Tokyo residents voted in Yoichi Masuzoe, 65, a former health minister backed by Abe, ahead of Morihiro Hosokawa, an ex-prime minister campaigning on an anti-nuclear platform. The win may smooth the path to re-starting some of Japan’s reactors, all 48 of which are offline for safety reviews after the March 2011 earthquake and tsunami sparked meltdowns at the Fukushima Dai-Ichi plant.

The Topix Electric Power & Gas Index slid 0.4 percent, one of only two of the 33 Topix industry groups that fell along with insurers. The measure jumped 4.8 percent on Feb. 7, the biggest advance among the subsectors. Tokyo Electric Power Co. lost 2 percent to 479 yen after surging 11 percent on Feb. 7. Shikoku Electric Power Co. fell 1.8 percent to 1,437 yen following a 5.7 percent jump the previous session. Kansai Electric Power Co. (9503) declined 1.7 percent to 1,077 yen after gaining 6.6 percent.

Record Shortfall

Japan’s current-account deficit widened to a record in December on soaring imports, adding to Abe’s challenges as he tries to drive a recovery in the world’s third-biggest economy. The 638.6 billion yen shortfall surpassed November’s gap of 592.8 billion yen, the finance ministry said in Tokyo today. The deficit was smaller than the 685.4 billion yen median forecast of 27 economists in a Bloomberg survey.

Ebara advanced 6.1 percent to 695 yen, the second-biggest increase on the Nikkei 225. The company reported a 26 percent gain in nine-month net income, with operating profit up 28 percent.

Olympus Earnings

Olympus Corp. jumped 7.2 percent to 3,335 yen to lead gains on the Nikkei 225 after the optics maker’s third-quarter profit beat estimates.

Asahi Glass Co. slid 6.7 percent to 544 yen, the most on the Nikkei 225, after its profit forecast fell short of analyst expectations.

The Topix plunged 4.8 percent on Feb. 4, capping a 13 percent drop from a Jan. 8 high and erasing about 35 trillion yen in market value in that period. The measure traded at 1.19 times book value today, after falling to its lowest since June on Feb. 4 and compared with 1.29 at the start of this year. Volume today was 24 percent lower than the 30-day average.

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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