Japan Stocks Gain After U.S. Jobs Data Push Back Rate-Rise Bets

Japanese stocks rose after a U.S. jobs report missed estimates, fueling speculation the Federal Reserve will keep interest rates lower for longer.

Energy shares led the advance after a report signaled U.S. crude output cuts, sending shares of Japan Petroleum Exploration Co. up 4.6 percent. SoftBank Group Corp. was the biggest boost to the Topix index, jumping 4.3 percent. Kyoei Steel Ltd. advanced 5.3 percent after Credit Suisse Group AG raised its operating-profit estimate on the firm and said infrastructure-related steel companies are attractive amid concern about the global economy.

The Topix added 1.3 percent to 1,463.92 at the close in Tokyo, climbing for a fourth day. The measure dropped 0.6 percent last week. The Nikkei 225 Stock Average advanced 1.6 percent Monday to 18,005.49, the highest close since Sept. 18. The yen weakened 0.1 percent to 120.01 per dollar after strengthening to as high as 118.68 on Friday following data showing U.S. employers added 142,000 workers in September, missing economist predictions for a gain of 201,000.

“Expectations for U.S. interest rate hikes are being pared back and this is having a big impact today,” said Seiichiro Iwamoto, a senior fund manager at Mizuho Asset Management Co. in Tokyo.

The U.S. Labor Department report also revised down employment gains in the previous two months by a total of 59,000 jobs. The jobless rate held at 5.1 percent, while wage growth was little changed from the prior month.

Fed Bets

The probability the Fed will raise rates by its Dec. 15-16 meeting fell to 34 percent from 46 percent before the jobs report, according to futures data compiled by Bloomberg.

E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent. The underlying gauge climbed 1.4 percent in New York on Friday, staging its biggest intraday rebound in almost four years, as commodity shares advanced following the surprisingly weak jobs report.

“Throughout this year we’ve had moments when stocks rose on an increased probability of rate increases in the U.S., but at the end of last week the market saw the probable delay as a positive,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo.

Energy shares rose the most among the Topix’s 33 industry groups, with Japan Petroleum Exploration rising 4.6 percent and Inpex Corp. adding 3.1 percent. The number of active U.S. rigs fell by 26 to 614 last week, a five-year low, according to data from Baker Hughes Inc., an oil-field services company. West Texas Intermediate crude futures jumped a second day.

SoftBank climbed the most in almost a month after Alibaba Group Holding Ltd. jumped 7.4 percent in New York on Friday. SoftBank’s stake in Alibaba is worth 6.1 trillion yen ($50.8 billion), according to the Japanese phone company’s website.

Trading Houses

Trading houses gained, with Mitsubishi Corp. jumping 5.2 percent and Mitsui & Co. adding 2.8 percent. Glencore Plc surged as much as 72 percent in Hong Kong trading after people familiar with the situation said last week that Mitsui is among those interested in buying a minority stake in the Swiss commodity trader’s agricultural business.

Kyoei Steel rallied 5.3 percent after Credit Suisse raised its outlook on the producer of steel bars. Other iron and steel-related stocks rose, with JFE Holdings Inc. advancing 3.9 percent.

Volume on the Topix and the Nikkei 225 was at least 26 percent below the 30-day average, according to data compiled by Bloomberg. The Bank of Japan starts a two-day meeting Tuesday, with 34 of 36 economists expecting the central bank to keep policy unchanged.

U.S. Earnings

Besides the BOJ meeting, Mizuho Asset Management’s Iwamoto said this week investors will be focusing on U.S. company profit updates, with Alcoa Inc. unofficially kicking off the earnings season on Oct. 8. About 800 Topix members are due to publish earnings in October, with most reporting near the end of the month.

“We’ll finally get to gauge the impact to earnings from emerging countries, including China, Iwamoto said. “That will be a key point.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE