Topix Rises to Three-Week High on Earnings Optimism, Yen

Japan’s Topix index rose to a three-week high as investors speculated corporate earnings will beat forecasts and a weaker yen boosted exporters.

Canon Inc., the world’s No. 1 camera maker, gained 1.4 percent as the yen slid against all of its 16 major counterparts. Suzuki Motor Corp. climbed 2.4 percent on a report the carmaker’s first-half operating income may beat estimates. Furukawa Battery Co. jumped 10 percent after reporting better-than-expected profit.

The Topix climbed 0.6 percent to 1,212.36 at the close in Tokyo, its highest since Sept. 27, with all but three of its industry groups advancing. The gauge rose 0.7 percent last week after U.S. lawmakers reached an accord to end the government shutdown and lift the debt ceiling. The Nikkei 225 Stock Average today added 0.9 percent to 14,693.57. The yen slipped 0.4 percent to trade at 98.11 against the dollar.

“Market focus is shifting to reporting season after the U.S. avoided default,” said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “I think there’s optimism about corporate earnings. Companies that haven’t fully priced in a weaker yen have room to raise their profit forecasts.”

While leading gains among developed markets this year, the Topix added just 1.5 percent this month after Prime Minister Shinzo Abe decided to push ahead with a sales tax increase and the U.S. shut down parts of its government. Some 590 companies on the 1,744-member gauge are scheduled to report results through Oct. 31, with earnings season peaking next week.

Earnings per share for companies on the Topix are expected to grow 56 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

Trade Data

Japan’s exports grew 11.5 percent in September from a year earlier, the Finance Ministry said today, less than the revised 14.6 percent gain in August and below the 15.6 percent median forecast of economists surveyed by Bloomberg News. Imports climbed 16.5 percent, leaving a trade deficit of 932.1 billion yen ($9.5 billion).

Separately, Bank of Japan Governor Haruhiko Kuroda said today Japan’s economy is moving smoothly to achieve a 2 percent inflation target.

Canon gained 1.4 percent to 3,185 yen as the yen fell. Komatsu Ltd., a maker of construction machinery that gets most its revenue abroad, added 1.5 percent to 2,402 yen.

Suzuki, Furukawa

Suzuki Motor climbed 2.4 percent to 2,470 yen after the Nikkei newspaper reported the carmaker may report a 90 billion yen operating profit for the first half.

Furukawa Battery jumped 10 percent to 577 yen after reporting 410 million yen in net income, beating its 200 million yen forecast.

Jafco Co. added 2 percent to 5,120 yen after the investment firm’s half-year profit rose about sevenfold from a year earlier.

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The measure rose 0.7 percent on Oct. 18 as results from Google Inc. topped estimates and speculation grew that the Federal Reserve will delay cutting the pace of bond purchases.

U.S. Reports

The September U.S. jobs report, originally scheduled to be released Oct. 4, will be issued tomorrow after being delayed by the partial government shutdown. October employment figures will come out on Nov. 8, rather than Nov. 1. Delayed economic data will prevent policy makers from paring asset buying until their March 18-19 meeting, according to the median of 40 responses by economists in a survey conducted by Bloomberg last week.

“Money is flowing into stocks after the U.S. dodged a financial crisis for now as the Fed’s tapering is likely to be delayed.” said Gentoku Kiyokawa, Tokyo-based head of the Japanese investment management department at BNP Paribas Investment Partners. “But investors can’t buy stocks a lot because the fiscal problem was just postponed without getting solved.”

The Topix traded at 1.27 times book value as of today, compared with 2.56 for the S&P 500 and 1.79 for the Stoxx Europe 600 Index on Oct. 18. Its 30-day historic volatility was at 16.11 today, compared with its five-year median of 19.29.

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