Japan Stocks Cap Best Weekly Gain Since July After Fed Minutes

  • Federal Reserve officials in no rush to raise interest rates
  • Fast Retailing slumps after earnings, forecasts miss estimates

Japanese stocks rose, capping the biggest weekly advance since July, after Federal Reserve minutes indicated the central bank isn’t in a hurry to raise U.S. interest rates. Commodity-related shares climbed, while Fast Retailing Co. slumped.

The operator of Uniqlo clothing stores sank 9.8 percent after earnings and forecasts missed analyst estimates. Iron and steel producers led gains among the 33 Topix index industry groups, with Kobe Steel Ltd. jumping 6.9 percent after Bank of America Corp. raised its rating on the shares. Toshiba Corp. rose 5.7 percent after DigiTimes reported the company’s memory operations may be a target for acquisition by Tsinghua Unisplendour Co. Nisshinbo Holdings Inc. added 6.5 percent after the Nikkei newspaper reported the textile maker will pay 10 billion yen ($83 million) to buy Nanbu Plastics Co.

The Topix climbed 2.3 percent to 1,515.13 in Tokyo, capping a weekly gain of 4.9 percent and climbing to the highest close since Aug. 31. The Nikkei 225 Stock Average rose 1.6 percent to 18,438.67, posting a 4 percent increase this week. Global stocks rallied for an eighth day after Fed officials noted that while the U.S. economy continued to improve, market turmoil and the threat of weakness abroad were among reasons for keeping rates near zero.

“We’re in a Goldilocks state where the economy is looking positive, but the rate hike will probably be pushed back,” Juichi Wako, a senior strategist at Nomura Holdings Inc., said by phone in Tokyo. “We’ll continue to see a correction of excessive pessimism.”

Fed Minutes

Minutes of the Sept. 16-17 Federal Open Market Committee meeting showed policy makers are confident about the U.S. economy as unemployment, consumer spending and the housing market show encouraging signs. Still, threats from abroad were enough for officials to forgo raising interest rates amid worries that China’s slowing growth will weigh on emerging markets, resulting in a stronger dollar and creating an additional drag on the economy as U.S. exports slow.

Speculation policy makers will refrain from tightening this year has driven demand for risk assets such as oil and equities. The MSCI All-Country World Index headed for the best week since December 2011.

The slumping greenback has been a boon to commodity-related shares, which led gains among the Topix’s 33 industry groups this week. A measure of mining companies, which includes oil explorer Inpex Corp., surged 17 percent over the five days, while iron and steel producers added 15 percent. Kobe Steel jumped 6.9 percent Friday after Bank of America upgraded the shares to buy from neutral.

Topix's Biggest Winners in Week of Oct. 5 - 9
Topix's Biggest Winners in Week of Oct. 5 - 9

Retailers were among the biggest losers this week, extending losses on Friday after Fast Retailing tumbled the most since May 2013. The company said it faces hurdles in its U.S. operations where “relatively low recognition” of the Uniqlo brand has led to sustained losses.

Fast Retailing’s fall was weighing on the Nikkei 225 and masking the entire market’s strength, according to Tomoichiro Kubota, a senior analyst at Matsui Securities Co.

“Overall, the risk-on mood in strengthening thanks to the receding expectations for a rate hike and the return of commodity prices,” Kubota said.

Toshiba Gains

Toshiba jumped 5.7 percent, the most since Aug. 26, after DigiTimes, citing unidentified industry sources, said the company’s memory operations -- as well as those of rival SanDisk Corp. -- may be targeted by Chinese computer maker Tsinghua for acquisition.

Nisshinbo climbed 6.5 percent after the Nikkei reported the company will pay 10 billion to buy privately held Nanbu Plastics. The newspaper didn’t cite any source.

E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent after the underlying gauge closed above 2,000 for the first time since the middle of the August selloff.

Japanese markets are closed for a holiday on Monday.

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