Japanese shares rose a fourth day, with the Topix index extending a six-month high, as earnings from companies including Honda Motor Co. and Mitsubishi Electric Corp. cheered investors.
Honda gained 3.1 percent for the biggest boost to the Topix after the carmaker reported a 20 percent gain in profit and raised its full-year net-income forecast. Mitsubishi Electric added 3.4 percent after the electronic-component maker boosted its operating-profit outlook as first-quarter earnings jumped. Shinsei Bank Ltd. rose the most on the Nikkei 225 Stock Average after profit beat analyst estimates. Nomura Holdings Inc., Japan’s No. 1 brokerage, lost 1.4 percent as net income slumped.
The Topix added 0.1 percent to 1,292.24 in Tokyo, its highest close since January 22. About nine shares dropped for every seven that rose. The Nikkei 225 increased 0.2 percent to 15,646.23. The yen held at 102.14 per dollar after falling 0.3 percent yesterday.
On earnings, “the backlash from the sales-tax increase wasn’t as severe as first thought,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. “Companies that are battling on are standing out. Results aren’t as bad as initially expected.”
The Topix surged 14 percent from this year’s low on April 14 amid signs Japan is weathering a consumption-levy increase from that month and speculation the nation’s $1.2 trillion pension fund will buy more local shares. The gauge traded at 1.2 times book value today compared with 2.7 for the Standard and Poor’s 500 Index and 1.9 for the Stoxx Europe 600 Index yesterday.
Japan’s industrial production fell the most since the March 2011 earthquake, highlighting the widening impact to the economy of the tax increase. Industrial output dropped 3.3 percent in June from May, the trade ministry said today in Tokyo. The figure was more than twice the median forecast for a 1.2 percent contraction in a Bloomberg News survey of 31 economists.
“People were thinking that any backlash from the sales-tax increase will be within expectations, but now they may start thinking that won’t be the case,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees the equivalent of $32.1 billion. Still, share declines may be limited because “it looks like the Japanese government pension fund or other pensions are buying stocks.”
More than 1,300 of the 1,809 companies on the Topix are scheduled to report earnings this week or next. Of the 107 businesses that posted earnings since July 1 and for which Bloomberg has estimates, 64 percent beat analysts’ projections for profit, according to data compiled by Bloomberg.
Honda added 3.1 percent to 3,658 yen, its highest close since April. Quarterly profit was 146.5 billion yen ($1.4 billion), the carmaker said yesterday, while analysts surveyed by Bloomberg had expected 153.2 billion yen. Net income will probably climb 4.5 percent to 600 billion yen in the year ending March 31, Honda said. The average estimate in a Bloomberg survey was 631.4 billion yen.
Mitsubishi Electric added 3.4 percent to 1,404 yen, the second-biggest boost to the Topix. The company said net income for the first quarter surged 69 percent to 43 billion yen, and raised its full-year operating profit forecast to 260 billion yen from 250 billion yen.
Shinsei surged 8.2 percent to 224 yen, its biggest gain in more than a year. The lender’s net income rose to 20 billion yen in the first quarter, while analysts surveyed by Bloomberg had expected 13.4 billion yen.
Nomura sank 1.4 percent to 657 yen after posting a 70 percent drop in profit to 19.9 billion yen in the three months ended June. Daiwa Securities Group Inc., Japan’s second-biggest brokerage, reported 34.4 billion yen in quarterly profit, beating estimates for 30 billion yen. The stock rose 1.8 percent to 875.4 yen.
Futures on the S&P 500 added 0.2 percent today. The measure slipped 0.5 percent yesterday as President Barack Obama announced new sanctions against Russia and warned its actions in Ukraine are “setting back decades of progress,” snuffing out earlier gains led by telephone stocks.