Topix Closes Little Changed as Energy Stocks Rebound With Crude

  • Report says Saudi Arabia set to propose an OPEC output cut
  • Fast Retailing drops to be biggest drag on Nikkei 225

Japan’s Topix index closed little changed, reversing earlier losses as oil-related stocks rebounded on a report Saudi Arabia plans to propose a reduction in OPEC crude output.

The Topix added less than 0.1 percent to 1,602.94 at the close in Tokyo after sliding as much as 0.4 percent. Five stocks fell for every four that rose. The Nikkei 225 Stock Average was little changed at 19,939.90.

“It’s an interesting move by Saudi Arabia,” said Andrew Clarke, director of trading at Mirabaud Asia Ltd., a Hong Kong brokerage. “So there’s a kneejerk reaction to oil prices.”

West Texas Intermediate oil rose 1.7 percent to trade at $40.61, erasing some of Wednesday’s 4.6 percent drop, after Energy Intelligence reported that Saudi Arabia will propose an eventual 1 million barrel a day cut in OPEC output. The nation led OPEC’s decision in November last year to maintain output and defend market share against higher-cost shale producers. 

Oil producers and explorers led gains among the 33 Topix industry groups. Explorer Inpex Corp. added 2.1 percent, reversing a 1.6 percent decline, while Japan Petroleum Exploration Co. jumped 2.2 percent. Daito Trust Construction Co. advanced 2.5 percent after saying orders for new building projects rose last month.

Biggest Drag

Fast Retailing Co. dropped 1.6 percent, the biggest drag on the Nikkei 225, after saying same store sales at its Uniqlo brand shops in Japan slumped 8.9 percent in November from a year earlier.

The Saudi proposal would require countries inside and outside of OPEC -- including Russia, Iran and Mexico -- to also cut production and wouldn’t take affect until at least 2016, according to a report from Energy Intelligence, citing a delegate it didn’t identify. A majority of OPEC members agree on a supply cut, according to the Iranian oil ministry’s Shana news agency.

E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent after the underlying gauge dropped 1.1 percent on Wednesday, its steepest one-day loss since Nov. 13. 

Yellen Confident

Federal reserve Chair Janet Yellen is increasingly confident the U.S. economy is growing, intensifying speculation that the Fed will tighten policy just as the European Central Bank seems poised to expand stimulus. Investors are awaiting Friday’s jobs report, the last major U.S. data before the Fed decision on Dec. 16.

Traders see a 74 percent chance the Fed will raise U.S. interest rates in December. By contrast, economists surveyed by Bloomberg unanimously predict the European Central Bank will expand stimulus on Thursday.

Yellen told the Economic Club of Washington on Thursday she expects the U.S. economy to continue to grow at a “moderate pace” over the next several years that will be fast enough to boost both employment and inflation.

“Yellen’s speech was as expected and showed that they plan to start normalizing rates in December,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. 

Japanese stocks have weathered a cooling Chinese economy and the prospect of monetary tightening by the Fed to rank among the best performers in developed countries this year. The Topix has rallied 14 percent in 2015.

(An earlier version of this story was corrected to show extra stimulus expected in Europe.)

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