Japan’s Nikkei 225 Rises to 15-Year High as BOJ Keeps Stimulus

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Japan’s Nikkei 225 Stock Average climbed for a second day to reach a 15-year high after the Bank of Japan maintained its record monetary stimulus.

Energy shares led gains as crude oil rose to the highest level this year. Dentsu Inc. jumped 6.1 percent after the advertising agency’s sales increased. Kawasaki Heavy Industries Ltd. surged 2.5 percent after the Nikkei newspaper said profit this fiscal year will grow by 16 percent. Carmakers declined after UBS AG issued negative reports on Toyota Motor Corp. and Fuji Heavy Industries Ltd.

The Nikkei 225 advanced 0.8 percent to 19,789.81 in Tokyo, the highest close since April 2000. The Topix index climbed 0.6 percent to 1,588.47, with all but four of its 33 industry groups rising.

“At this point additional easing isn’t necessary, so as expected the Bank of Japan maintained its current policy,” said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which oversees $11 billion. “Japanese company earnings this fiscal year are estimated to show rising sales and rising profits, and valuations do not seem stretched.”

The BOJ maintained a plan to expand the monetary base at an annual pace of 80 trillion yen, as forecast by all 34 economists in a Bloomberg survey. The central bank remains far from achieving its inflation target, with its preferred consumer price gauge flat in February from a year earlier.

Prices Flat

The bank said Wednesday that price increases will remain around zero for the time being. Policy makers are confident for now that a cycle of rising profits, wages and expectations for price gains will drive inflation to their goal.

“The effects from wage increases will only become visible from April, so the BOJ will first want to see that very carefully before acting,” said Seiichiro Iwamoto, who helps oversee the equivalent of $37 billion at Mizuho Asset Management Co. in Tokyo. “The rush of demand last year ahead of the April sales-tax hike has been distorting the year-on-year comparisons of recent economic data as well, so we’ll have to see the situation in April and thereafter.”

Dentsu jumped to a record, rising 6.1 percent, after saying sales in March gained 2.5 percent from a year earlier. Separately, Citigroup Inc. upgraded its price target for the advertising agency by 18 percent to 6,000 yen, saying a string of recent wins for contracts should continue as sponsors finalize their advertising plans for the Tokyo Olympics.

Crude Rallies

Energy shares were the biggest gainers in the Topix for a second day as crude continued to rally, climbing nearly 10 percent over the past two days. Japan Petroleum Exploration Co. rose 3.2 percent, reaching the highest level since June, when the rout which halved oil prices began.

Industrial-equipment maker Kawasaki Heavy climbed 2.5 percent after the Nikkei said growing sales of airplane parts to Boeing Co. and recovering demand for motorcycles from emerging-market countries should boost profits by 16 percent to 100 billion yen in the current fiscal year.

Automakers fell, with Fuji Heavy slumping 2.2 percent after UBS lowered its rating to sell from neutral, citing a negative environment for the automobile sector. The brokerage also lowered its rating for Toyota to neutral from buy, sending shares sliding 0.5 percent.

E-mini futures on the Standard & Poor’s 500 Index rose 0.2 percent after the underlying gauge dropped 0.2 percent yesterday in New York.

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