Japan Stocks Climb on Stimulus Bets, U.S. Factory Orders

Japan Stocks Rise Second Day
Employees work on the trading floor of the Tokyo Stock Exchange in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

 Japan stocks rose a second day amid speculation central banks in China and Europe will take action to spur growth, and as U.S. factory orders beat estimates.

Komatsu Ltd., a maker of construction equipment that gets 23 percent of its sales in the Americas, added 2 percent. Inpex Corp., Japan’s No. 1 energy explorer, advanced 2.9 percent after crude rose to a one-month high. JFE Holdings Inc., the nation’s second-biggest steelmaker, dropped 5.3 percent on speculation it may sell new shares.

The Nikkei 225 Stock Average gained 0.4 percent to 9,104.17 at the 3 p.m. trading close in Tokyo, with volume 14 percent below the 30-day average. The broader Topix Index advanced 0.2 percent to 778.70 after adding 1 percent yesterday, the highest close since May 2. Gains were limited today as the yen strengthened today against 11 of its 16 major counterparts.

“Bulls and bears are taking turns every two months or so, and now is the time for bulls,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 5 trillion yen ($63 billion). “The market is choosing to focus on positive. There’s optimism about the European Central Bank” meeting tomorrow.

The Topix has rebounded 12 percent since June 4, when it plunged to its lowest since 1983, after euro-zone leaders agreed to relax conditions for rescuing lenders and as speculation mounted that central banks support the global economy if needed. The advance has boosted the price of shares on the gauge to 1.1 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.4 times for the Europe Stoxx 600 Index.

Futures on the S&P 500 were little changed today, with the U.S. market closed for a holiday. The gauge gained 0.6 percent to a two-month high in New York yesterday, when data showed U.S. factory orders rose in May for the first time in three months.

Komatsu, Nintendo

Exporters to the U.S. advanced. Komatsu rose 2 percent to 1,902 yen. Nintendo Co., a maker of gaming consoles that relies on the Americas for 39 percent of its sales, rose 2 percent to 9,670 yen.

Mining and trading companies advanced the most among the Topix’s 33 industry groups on optimism for global easing to support growth. The European Central Bank and the Bank of England announce interest-rate decisions tomorrow. ECB officials are expected to lower their benchmark rate by a quarter point to a record-low 0.75 percent, according to the median forecast of 57 economists surveyed by Bloomberg.

China may cut banks’ reserve ratios three more times this year to increase liquidity in the financial system, according to the Shanghai Securities News, which cited a report by the China Banking Association released today.

Inpex advanced 2.9 percent to 462,000 yen. Japan Petroleum Exploration Co. climbed 3 percent to 3,140 yen. Commodity trader Mitsui & Co. gained 2.3 percent to 1,227 yen.

Oil Surges

Oil for August delivery yesterday surged $3.91 to $87.66, the highest close since May 30, on U.S. factory orders and after Iran said sanctions threaten the Persian Gulf country’s national security. The Thomson Reuters/Jefferies CRB Index of raw materials rose 3 percent yesterday.

“Oil is rising partly because of developments in the Middle East,” said Fumio Matsumoto, fund manager who helps manage about 100 billion yen in Japanese equities at T&D Asset Management Co. “It’s not that the economy in North America is going south, but we are not seeing many positive factors. I think some investors are reducing their holdings in Japanese shares dependent on foreign demand.”

U.S. Growth

The International Monetary Fund yesterday cut its growth forecast for the U.S. economy, with Managing Director Christine Lagarde saying further monetary policy easing may be needed. The U.S. economy will grow by 2 percent this year, the IMF said in a statement yesterday, cutting its previous 2.1 percent estimate.

JFE Holdings dropped 5.3 percent to 1,227 yen to lead declines on the Nikkei 225. The stock fell on prospects it may sell new shares to help fund a 1 trillion yen expansion through March 2015. The company will focus on Asian countries, where demand growth exceeds the domestic market, Tokyo-based JFE said April 20.

Renesas Electronics Corp., which has been unprofitable ever since it was established in 2010, fell 0.9 percent to 345 after surging as much as 6.3 percent. The chipmaker yesterday said it will eliminate more than 5,000 jobs, or 12 percent of its workforce, to help pare losses exacerbated by falling TV demand and chip prices.

All Nippon Airways Co., Japan’s largest carrier, added 1 percent to 195 yen. It earlier dropped as much as 1.6 percent after announcing a 211 billion yen share sale to beat Japan Airlines Co.’s planned initial public offering to the market.

The Nikkei 225 Volatility Index slid 2.1 percent to 19.50, indicating traders expect a swing of about 5.6 percent on the benchmark gauge over the next 30 days.

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