Japan's Topix Advances First Time in Three Days Ahead of Fed

  • S&P 500 closes at highest level in more than two weeks
  • U.S. retail sales climb for second month, factory output falls

Japanese stocks rose, following U.S. equities higher, as investors speculated that the Federal Reserve will refrain from raising U.S. interest rates this week.

Sony Corp. gained 1.2 percent after the electronics maker said it’s cutting the Japanese price of its PlayStation 4 to maintain a sales lead through the year-end holiday shopping season. Asahi Group Holdings Ltd. jumped 4.8 percent after Mizuho Financial Group Inc. raised its rating on the brewer. Hokkaido Electric Power Co. slumped 7 percent as utilities led declines on the Topix index.

The Topix added 0.7 percent to 1,472.60 at the close of trading in Tokyo, its first advance this week, with volume 27 percent below the 30-day average. The Nikkei 225 Stock Average increased 0.8 percent to 18,171.60. The Fed announces its interest rate review Thursday.

“Volumes are quite low and people are nervous, so any moves tend to be amplified,” said Andrew Sullivan, head of sales trading at Haitong International Securities Group Ltd. in Hong Kong. “The market is divided about the Fed and it’s not just about the direct U.S. impact but the in-direct impact too.”

Short Selling

Short-selling of shares on the Tokyo Stock Exchange surged to 42.4 percent of total trading value on Monday, the highest since bourse data became available in 2008. The ratio slipped to 39.6 percent Tuesday.

E-mini futures on the Standard & Poor’s 500 Index were little changed after the underlying equity measure rose 1.3 percent on Tuesday, closing at its highest level in more than two weeks.

Speculation has increased that the Fed will delay raising rates as China ignited concern that its slowdown could weigh on global growth. While investors remain confident the central bank will U.S. increase borrowing costs this year, traders are pricing in a 32 percent chance of action on Thursday, down from about 50 percent before China’s currency devaluation last month.

“I suspect whatever they do, about 50 percent of the market will be disappointed and that will prompt a reaction,” Sullivan said.

U.S. Data

A report Tuesday showed U.S. retail sales climbed for a second straight month, a sign consumers may be looking past recent volatility in financial markets. Although confidence has taken a hit from stock-market turmoil and global-growth concerns, the data show households are still putting their savings from cheap energy to work.

Other data showed that while consumers are holding up, manufacturing is struggling. U.S. factory production declined in August by the most since January 2014 as automakers scaled back after a surge the month before and a stronger dollar weighed on demand from overseas customers.

Sony added 1.2 percent. The PlayStation 4 in Japan will be priced as low as 34,980 yen ($293) starting Oct. 1 from the current 39,980 yen, Sony said Tuesday.

Asahi Group jumped 4.8 percent. Mizuho raised its rating on the brewer to buy from neutral, while also boosting its share price target by 12 percent.

Hokkaido Electric tumbled 7 percent, while Kansai Electric Power Co. dropped 6.2 percent. The Topix Electric Power and Gas Index slid 2.9 percent, the most among 33 industry groups, erasing the last two days of gains.

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