Japanese shares gained, with the Topix index closing higher after fluctuating most of the day, as drugmakers and shipping lines led the advance.
Pharmaceutical company Otsuka Holdings Co. surged 7.5 percent after its rating was raised to buy at Nomura Holdings Inc. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipper, jumped 3.3 percent after a report it will target return on equity of 10 percent in five years. Retailers fell the most among the 33 Topix industry groups, extending yesterday’s drop.
The Topix gained 0.1 percent to 1,285.92 at the close in Tokyo after falling as much as 0.4 percent and rising 0.5 percent. About three shares rose for every two that fell. The Nikkei 225 Stock Average added 0.1 percent to 15,534.82. The yen rose 0.1 percent to 103.95 per dollar after weakening for seven straight days.
“After Japanese shares plunged this month, they then sharply recovered,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which oversees about $474 billion in assets. “Nothing has fundamentally changed. The U.S. economy is still heading toward recovery.”
Futures on the Standard & Poor’s 500 Index were little changed after the underlying equity measure rose 0.1 percent yesterday to close above 2,000 for the first time. Data showed orders for U.S. durable goods jumped 23 percent in July, the biggest-ever increase, as bookings surged for commercial aircraft. The Conference Board’s consumer confidence index rose to 92.4 in August, the highest since October 2007, from a revised 90.3 a month earlier, the private research group said.
“If the U.S. economy recovers, then we’ll begin to see expectations for Japanese corporate earnings to rise on increased export volumes and a weaker yen,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. Still, “with buying energy low, we may see profit-taking at the top of the market.”
The value of stocks traded on the first section of the Tokyo Stock Exchange was 1.6 trillion yen ($15.6 billion) today, compared with this year’s daily average of about 2 trillion yen. The Topix is 1.3 percent away from erasing this year’s loss after climbing the previous two weeks.
Kawasaki Kisen gained 3.3 percent to 251 yen today, leading gains on the Topix Marine Transportation Index. The shipping company is set to double ROE to 10 percent by fiscal year 2019, the Nikkei newspaper reported, citing an interview with president Jiro Asakura. The stock was raised to outperform from underperform at Credit Suisse Group AG, with its price target lifted to 290 yen from 200 yen.
Otsuka Holdings jumped 7.5 percent to 3,645.5 yen, the biggest gain on record and its highest ever close. JPMorgan Chase & Co. and Nomura both raised their investment ratings and target prices on the stock. The drugmaker said yesterday it plans to increase dividend payments to 100 yen a share in 2015 and be “flexible” about share buybacks.
The Topix Retail Trade Index slumped 0.8 percent. Ryohin Keikaku Co., the operator of Muji brand stores, slid 0.9 percent to 11,930 yen after dropping 4.9 percent yesterday. Convenience-store operator Lawson Inc. lost 0.7 percent to 7,570 yen.
The Topix traded at 1.2 times book value today. That compares with multiples of 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index yesterday.