Topix Posts Longest Winning Streak in Three Months on Yen, Fed

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Japanese stocks rose for a fifth day, capping the longest winning streak since February, after the yen slid as investors weighed minutes from the Federal Reserve’s latest meeting.

Mazda Motor Corp., which gets about 80 percent of revenue abroad, climbed 1.3 percent. MS&AD Insurance Group Holdings Inc. jumped 5.4 percent as forecasts beat estimates and the company said it would buy back shares. Panasonic Corp. added 2.3 percent after Nomura Holdings Inc. raised its rating on the electronics manufacturer’s stock. Lixil Group Corp. dropped 7.5 percent after the maker of aluminum products said it may post a loss if its German subsidiary files for insolvency.

The Topix climbed 0.2 percent to 1,646.80 at the close in Tokyo, extending a 7 1/2 year high. The Nikkei 225 Stock Average added less than 0.1 percent to 20,202.87. The yen traded at 121.07 per dollar after touching the weakest level since March 17 on Wednesday. The U.S. central bank’s minutes reinforced expectations that interest rates will probably be boosted in the second half of this year.

“With the Fed expecting to maintain the status quo, that’s a plus for the stock market right now,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “The divergence of monetary policies is driving the dollar higher against the yen and the euro, which is a boon for Japanese and European equities.”

The Bank of Japan began a two-day policy meeting today, with all 36 economists surveyed by Bloomberg predicting no change to policy. Twenty-one expect additional easing by the end of October, down from 23 in a poll last month.

Japan Economy

The central bank may upgrade its economic assessment for the first time in almost two years, the Nikkei newspaper reported today without saying where it got the information. A government report yesterday showed first-quarter economic growth was the fastest in a year.

“The GDP data weren’t bad, so if the BOJ lifts its economist assessment, it means there’s no additional easing this time,” said Akino.

Exporters gained as the yen weakened ahead of the BOJ meeting. Mazda strengthened 1.3 percent, while Brother Industries Ltd., an office-equipment maker that gets 81 percent of sales overseas, climbed 1.9 percent.

Insurers led gains among the Topix’s 33 industry groups with a 2.2 percent advance. MS&AD Insurance added 5.4 percent after forecasting net income in the current fiscal year will reach 157 billion yen ($1.3 billion), above analyst estimates of 151.6 billion yen. The company also announced it will spend as much as 20 billion yen to buy back shares.

Sompo, Panasonic

Sompo Japan Nipponkoa Holdings said it expects profit to triple in the current year and plans to repurchase as much as 1.5 percent of shares. The insurer’s stock surged 7.4 percent to close at a record.

Nomura’s upgrade of Panasonic to buy from neutral sent the shares 2.3 percent higher. The brokerage maintained its price target at 2,100 yen, 17 percent above today’s close.

Lixil slumped 7.5 percent after saying it may post a loss of as much as 41 billion yen related to accounting irregularities at its German unit. Joyou AG, which mainly operates in China, yesterday announced it will write down more than half of its capital and possibly file for insolvency.

After rising 0.8 percent in the morning, the Topix briefly erased gains in the afternoon before recovering to close higher. Takeshi Suzuki, a senior portfolio manager at Pictet Asset Management Ltd, attributed the weakness to a lack of fresh developments.

“In the short term, it seems as if markets have digested all the positive news,” said Suzuki. “For stocks to move up another leg, investors might need more conviction about second-half earnings.”

E-mini futures on the Standard & Poor’s 500 Index fell 0.2 percent after the underlying U.S. measure slipped 0.1 percent on Wednesday in New York, dragged lower by a selloff in airlines.

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