Japanese stocks rose as investors weighed company earnings and after the yen weakened against the dollar amid better-than-estimated U.S. economic data.
Toyota Motor Corp. added 1.3 percent as the weaker currency boosted the outlook for export earnings. Nippon Telegraph & Telephone Corp. rose 3.2 percent after saying it will buy back as much as 100 billion yen ($804 million) of shares. Milk producer Meiji Holdings Co. surged a record 17 percent after boosting its profit forecast. Pumpmaker Ebara Corp. slumped 6.8 percent after posting a wider net loss.
The Topix index added 0.5 percent to 1,673.58 at the close of trading in Tokyo. The measure earlier rose as much as 1.3 percent to its highest since 2007. The Nikkei 225 Stock Average climbed 0.2 percent to 20,664.44. The yen traded at 124.74 per dollar after weakening 0.4 percent on Wednesday, a third day of losses, as services-industry data indicated the U.S. economy is on track for faster growth, raising prospects for an interest-rate hike next month.
“The Topix and Nikkei are sustaining highs because overall earnings are good, and that’s acting as a support,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which oversees 5.8 trillion yen. “A U.S. rate increase in September is likely. The first increase has already been priced into a weaker yen, so the focus is on the pace of the second and third increases.”
More than 160 firms on the Topix index report earnings on Thursday. Of the companies that have posted quarterly results this season and for which estimates are available, 64 percent exceeded profit expectations, an improvement from the 48 percent that beat forecasts in the previous quarter, according to data compiled by Bloomberg.
E-mini futures on the Standard & Poor’s 500 Index fell less than 0.1 percent after the underlying measure gained 0.3 percent on Wednesday in New York.
Investors are watching U.S. economic reports to gauge when the Federal Reserve will increase interest rates, a decision it has forecast for this year. Data Wednesday showed service providers from restaurants to real-estate agencies expanded in July at the strongest pace in a decade, putting the economy on track for faster growth.
The government’s monthly job report on Friday is projected to show U.S. employers took on 225,000 workers last month, while the jobless rate held at a seven-year low of 5.3 percent.
Interest-rate futures traders are pricing in a 48 percent probability that the Fed will raise rates in September, up from a 38 percent chance earlier this week.
“The ISM non-manufacturing data has strengthened the view that U.S. rate hikes will come earlier, weakening the yen,” Yutaka Miura, a technical analyst at Mizuho Securities Co. in Tokyo said by phone. “The weaker currency will be a tailwind for Japanese stocks. We’ll still see a focus on individual earnings results.”
Toyota gained 1.3 percent, the biggest support to the Topix. Honda Motor Co., which gets 87 percent of its sales from abroad, rose 3 percent.
Nippon Telegraph added 3.2 percent for its highest close since 2000. The company posted a jump in quarterly profit and said it plans to buy back 0.99 percent of shares. The stock was the second-biggest support to the Topix.
Meiji Holdings surged 17 percent, the most on the Nikkei 225. The dairy company raised its full-year net income forecast by 20 percent to 50 billion yen, beating analyst estimates.
Ebara slumped 6.8 percent, the most since 2013. The company posted a first quarter net loss of 2.43 billion yen, compared with a loss of 1.87 billion yen a year earlier.