Topix Rises From Biggest Loss Since March on Fed Optimism

Japanese stocks rose, with the Topix index rebounding from the biggest loss since March, after U.S. stocks rallied on optimism the Federal Reserve will continue to support the economy and investors weighed earnings.

The Topix gained 0.7 percent to 1,160.01 at the close after slumping 2.6 percent yesterday, the steepest drop since March 14. All but three of the gauge’s 33 industry groups rose today. The Nikkei 225 Stock Average added 0.9 percent to 14,163.78. The Fed must continue to spur economic growth as indicators for inflation and employment remain far from the central bank’s goals, Chair Janet Yellen said.

“Japanese stocks are rising mainly because they dropped a lot yesterday,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Yellen hasn’t changed her stance. She is dovish and continues to watch economic reports closely.”

Nisshin Steel Co. soared 15 percent after swinging to a full-year profit. Mitsubishi Corp. jumped by the most since October 2011 after the nation’s biggest commodities trader said it will buy back as much as 60 billion yen ($589 million) of its stock. Mitsui & Co., Japan’s second-largest trading house, climbed 3.6 percent after raising its dividend ratio to the highest in six years.

Futures on the Standard & Poor’s 500 Index were little changed today. The equity measure rose 0.6 percent yesterday after Yellen said “a high degree of monetary accommodation remains warranted” in testimony prepared for delivery to the Joint Economic Committee of Congress.

Relative Performance

The Topix (TPX) fell 11 percent this year, the most among major developed markets tracked by Bloomberg, as investors weighed whether Prime Minister Shinzo Abe and the central bank will foster a sustained economic recovery. The yen traded at 101.74 per dollar after weakening for the first time in four days yesterday.

About 500 companies on the Topix are scheduled to report earnings today and tomorrow, according to data compiled by Bloomberg. Of the companies on the Topix that have posted quarterly results since April 1 and for which Bloomberg had estimates, 59 percent beat earnings expectations as of yesterday.

Nisshin Steel jumped 15 percent to 1,150 yen after reporting full-year net income of 17.8 billion yen, compared with a 37.4 billion yen loss the previous year.

Mitsubishi, Mitsui

Mitsui added 3.6 percent to 1,516 yen after raising its dividend ratio to 30 percent. The increase from a 25 percent ratio last year is part of a two-year plan outlined by the Tokyo-based trading company yesterday. Mitsui forecast profit will drop 10 percent to 380 billion yen in the year to March 31 on lower oil and iron-ore prices.

Mitsubishi Corp. jumped 6.5 percent to 1,938 yen after saying it will buy back as many as 40 million shares, or about 2.4 percent of its stock outstanding. The shares also rose after the company posted profit that beat its own forecast.

Shipping lines posted the second-biggest gain among the Topix industry groups. Nippon Yusen K.K., Japan’s largest company in the sector by sales, added 2.5 percent to 289 yen. Mitsui O.S.K. Lines Ltd., ranked No. 2, gained 2.6 percent to 350 yen.

Nintendo Co. lost 0.7 percent to 10,595 yen after the maker of Wii game consoles reported a loss of 33.4 billion yen in the three months ended March. Analysts had expected a loss of 27.9 billion yen.

The Topix traded at 1.1 times book value today, compared with 2.6 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index yesterday.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.