Topix Snaps Two-Day Decline Amid U.S. Earnings Optimism

Japanese shares rose, with the Topix (TPX) index posting its first advance in three days, after the Standard & Poor’s 500 Index capped its longest rally since September amid optimism about U.S. earnings.

Resona Holdings Inc. gained 2.5 percent after Greenlight Capital Inc., the $10.3 billion hedge fund run by David Einhorn, said it bought shares in the Japanese bank. Seibu Holdings Inc., operator of the nation’s biggest hotel chain, jumped 11 percent on its trading debut after pricing its public offering at the bottom of its planned range. A gauge tracking energy explorers was the only one of the Topix’s 33 industry groups to fall after oil dropped the most in three months yesterday.

The Topix added 1 percent to 1,173.81 in Tokyo, its highest close since April 8. More than three shares rose for each that fell. The Nikkei 225 Stock Average increased 1.1 percent to 14,546.27. The yen was little changed at 102.60 per dollar. The S&P 500 gained for a sixth day yesterday.

“U.S. earnings weren’t as bad as the market had feared and its economy is showing it’s on the road to recovery,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The yen at 102 per dollar means we can expect Japanese companies to increase profits as the average assumption of big manufacturers for the currency is 99.48.”

Futures on the S&P 500 were little changed. The measure added 0.4 percent yesterday as health-care shares surged amid a $45.7 billion bid for Allergan Inc. and earnings from Netflix Inc. to Harley-Davidson Inc. topped estimates.

China PMI

Japanese shares maintained gains after a private report on China’s manufacturing matched estimates. The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 48.3 in April, in line with the median prediction of 25 analysts surveyed by Bloomberg News. While that was higher than the final March figure of 48, the reading below 50 signaled a fourth month of contraction in the sector.

“It’s slightly better month-on-month, which makes it a bit of a non-event,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “Stabilization is probably the key phrase with these numbers.”

Resona advanced 2.5 percent to 493 yen. Einhorn’s Greenlight said it bought the stock at 547 yen per share and described the Tokyo-based bank as “cheap on both an absolute and relative basis,” according to a letter sent to clients yesterday. The shares traded at 0.83 times book value yesterday, down from 0.94 at the start of the year.

Seibu IPO

Seibu jumped 11 percent to 1,770 yen. Seibu, which had disagreed with its biggest shareholder Cerberus Capital Management LP over the offering’s timing, had sold the shares at 30 percent less than an indicative price after two IPOs flopped in Japan last month.The hotel operator stands to benefit from rising tourism to Japan and expectations that the 2020 Olympics in Tokyo will boost demand.

The Topix Mining Index sank 2.2 percent after West Texas Intermediate oil dropped yesterday. WTI for May delivery, which expired yesterday, slid $2.24 to settle at $102.13 a barrel on the New York Mercantile Exchange, capping the biggest decline since Jan. 2.

Inpex Corp., which accounts for 88 percent of the subgroup, sank 2.5 percent to 1,456 yen. Japan Drilling Co. slipped 0.5 percent to 4,065 yen.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editors responsible for this story: Tom Redmond at tredmond3@bloomberg.net Jim Powell

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