Japanese Stocks Advance on Low Volume as Investors Wait on Fed

  • S&P 500 jumps for second day to highest close in four weeks
  • August trade deficit widens as exports rise, imports fall

Japanese stocks rose for a second day on lower volume as investors await a Federal Reserve decision on U.S. interest rates. Brokerages led gains while drugmakers fell.

Sensor maker Keyence Corp. jumped 6.6 percent and air-conditioner maker Daikin Industries Ltd. gained 4.2 percent after BNP Paribas SA rated the stocks a buy. Omron Corp., an electronic components maker, added 4.4 percent after saying it will buy California-based robotics company Adept Technology Inc. Shizuoka Bank Ltd. sank 2.9 percent after Credit Suisse Group AG initiated coverage on the regional lender with an underperform rating.

The Topix index added 1.3 percent to 1,491.91 at the close in Tokyo, with five shares rising for each that fell. Volume was 24 percent below the 30-day average. The Nikkei 225 Stock Average increased 1.4 percent to 18,432.27. The Fed announces its interest rate review Thursday.

“Global stocks have been recovering recently, and that’s because the view that the Fed won’t raise rates this month is providing the lifting power,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. in Tokyo, which oversees the equivalent of $48.2 billion. “The Fed is just about to announce, hence volumes are low.”

E-mini futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent after the underlying equity measure rose 0.9 percent on Wednesday, closing at its highest level in four weeks.

Fed Bets

Speculation has increased that the Fed will delay a rate increase as China ignited concern that its slowdown could weigh on global growth. While investors remain confident the central bank will raise borrowing costs this year, traders are pricing in a 32 percent chance of action on Thursday, down from 50 percent before China’s currency devaluation last month. Odds of a move at the December meeting are about 64 percent.

Data Wednesday showed prices paid by American households declined in August as cheaper gasoline helped keep inflation below the objective of Fed policy makers. The consumer-price index dropped 0.1 percent, the first decline since January. The so-called core measure, which strips out often-volatile fuel and food costs, rose 0.1 percent for a second month.

“With the Fed decision ahead of us, in principle we’re in a wait-and-see market, so gains may be limited,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone.

Credit Rating

Standard & Poor’s cut Japan’s long-term credit rating one level to A+ on Wednesday, saying it sees little chance of the government’s strategy turning around the poor outlook for economic growth and inflation over the next few years.

The move came a day after the Bank of Japan refrained from boosting record asset purchases, betting there will be a resumption in growth and inflation. That’s left the onus on Prime Minister Shinzo Abe and his Cabinet to consider a fiscal stimulus package to boost what evidence indicates is a lackluster recovery in the second half of the year so far. Central bank chief Haruhiko Kuroda is due to speak at a meeting in Tokyo Thursday.

Japan’s trade deficit widened to 569.7 billion yen in August, data released in Tokyo showed. Exports rose 3.1 percent and import fell 3.1 percent.

Keyence rose 6.6 percent, its biggest gain since November, after BNP Paribas rated the stock a buy and set a share price target 39 percent above Wednesday’s closing price. Daikin jumped 4.2 percent. The French brokerage’s share price target on Daikin was set 16 percent above Wednesday’s closing price.

Omron gained 4.4 percent after saying it made a tender offer to buy Adept after both companies’ boards approved the deal.

Shizuoka Bank slid 2.9 percent, the second-biggest drop on the Nikkei 225. Credit Suisse rated the stock new “underperform” and set the share price target 31 percent below the regional lender’s Wednesday closing price.

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