Japanese Stocks Halt Three-Day Fall on U.S. Homes, BOJ

Japanese shares gained, with the Nikkei 225 Stock Average snapping a three-day decline, as U.S. home prices rose the most in two years and the Bank of Japan and the country’s government signaled their resolve to tackle the stronger yen and deflation.

Canon Inc., a camera maker that gets 27 percent of its sales in the Americas, gained 1.5 percent. Fuji Heavy Industries Ltd. jumped 6.7 percent after the maker of Subaru cars raised its profit forecast. Ricoh Co. had the biggest drop in the Nikkei 225, falling 3.1 percent, after the office-equipment maker missed its first-half profit forecast. Panasonic Corp. rose 4.5 percent before forecasting after markets closed that it expects a 765 billion yen ($9.6 billion) loss instead of the 50 billion yen profit estimated in May.

The Nikkei 225 rose 1 percent to 8,928.29 at the 3 p.m. close in Tokyo, gaining 0.7 percent for the month. Volume on the gauge today was 8 percent above the 30-day average. The broader Topix Index climbed 1.2 percent to 742.33, with almost three shares advancing for each that fell. Stocks slid yesterday in the last 15 minutes of trading after the Bank of Japan announced its first back-to-back monthly stimulus expansion since 2003.

“The U.S. housing market is clearly recovering,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The joint statement from the government and the BOJ on stimulus measures helps convince investors that they are determined to overcome deflation and raises expectations they will continue to take aggressive steps to ease policy.”

The Topix has risen 3.2 percent since Sept. 6 after the European Central Bank started the latest wave of economic stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the Japanese gauge traded at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.

U.S. Futures

Futures on the S&P 500 added 0.1 percent in New York. Equity markets in the U.S. are scheduled to reopen today after Hurricane Sandy caused the longest weather-related shutdown in more than a century.

The S&P/Case-Shiller index of property values in 20 U.S. cities rose 2 percent from August 2011, the biggest year-to-year gain since July 2010, the group said yesterday in New York. The median forecast of 25 economists in a Bloomberg survey projected a 1.9 percent gain.

Canon rose 1.5 percent to 2,578 yen. Honda Motor Co., which gets more than 40 percent of its sales in North America, climbed 2.4 percent to 2,390 yen.

BOJ Stimulus

Japan’s central bank yesterday said it will offer unlimited loans at low interest rates to lenders. The move came alongside an 11 trillion yen ($138 billion) expansion of the central bank’s asset-purchase program.

Economy Minister Seiji Maehara and Japanese Finance Minister Koriki Jojima, in a joint statement with Governor Masaaki Shirakawa, said the government “strongly expects” powerful monetary easing until deflation is overcome. The joint statement was the first of its kind, Maehara said.

“The government and BOJ are in accord on the main points about how to support the economy,” said Kiyoshi Ishigane, a Tokyo-based strategist at Mitsubishi UFJ Asset Management Co. which oversees about $70 billion. “They’ve convinced investors their stance is aggressive toward stimulus measures, which is positive.”

Japan’s current earnings season peaks this week, with more than 570 of the 1,676 Topix companies reporting results. Of the 221 companies on the Topix that have reported quarterly revenue since Oct. 1, and for which Bloomberg News has estimates, 64 percent have missed projections.

Subaru Sales

“Japanese company earnings won’t badly deteriorate as long as we see some mild recovery in overseas economies,” Mitsubishi UFJ Asset Management’s Ishigane said. “It’s getting clearer that the U.S. housing market has bottomed, and that’s boosting markets.”

Fuji Heavy gained the most in the Nikkei 225, rising 6.7 percent to 767 yen after raising its full-year net income forecast 40 percent to 67 billion yen on better-than-expected U.S. sales.

Ricoh sank 3.1 percent to 667 yen, a seventh straight decline, after posting net income of 11.7 billion yen in the six months ended Sept. 30, missing its forecast by 13 percent.

Panasonic climbed 4.5 percent to 514 yen. Japan’s second-biggest television maker, projected a full year loss amid falling demand for its Viera TVs and additional restructuring costs. The forecast 765 billion-yen loss compares with the 24.7 billion-yen loss average of 17 analyst estimates compiled by Bloomberg.

The Nikkei Stock Average Volatility Index sank 4.9 percent to 19.01, indicating that traders expect a swing of 5.4 percent on the equity benchmark in the next 30 days.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE