Japan Stocks Rise as Topix Pares Worst Annual Start Since 2009

  • Murata Manufacturing posts best gain since 1998 on profit
  • Banks lead losses after BOJ moves to negative interest rate

Japanese stocks rose for a second day after the Bank of Japan’s unexpected boost to stimulus, paring the Topix index’s worst start to a year since 2009. Major lenders fell again following the central bank’s decision to start charging for some of their deposits held at the institution.

The Topix added 2.1 percent to 1,462.67 at the close in Tokyo, after rising on Friday amid wild swings as investors assessed the BOJ’s plan to introduce a negative interest rate on some deposits. The Nikkei 225 Stock Average gained 2 percent to 17,865.23. The yen traded at 121.32 per dollar after slumping 1.9 percent on Friday.

“With lower global growth and inflation expected, the BOJ has taken a leap forward, and Europe is considering a move as well,” Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo, said by phone. “Investors such as pension funds should slowly shift their assets from bonds to equities.”

Consumer lenders led gains, with Acom Co. surging 15 percent, the most since June 2014, after posting an increase in profit. Sony Corp. jumped 12 percent after reporting third-quarter earningsthat beat analyst estimates. NTT Docomo Inc. jumped 14 percent, its biggest gain in almost 16 years, after Japan’s biggest mobile phone carrier said it will buy back as much as 500 billion yen ($4.1 billion) of its own shares.

Nisshin Steel Co. soared 15 percent, the most in a year and biggest increase on the Nikkei 225, after saying it will buy back shares and confirming it’s in buyout talks with Nippon Steel & Sumitomo Metal Corp., which added 10 percent. Shiseido Co. advanced 13 percent after reporting operating profit that beat its forecasts. Murata Manufacturing Co. surged 16 percent, its biggest increase since 1998, after third-quarter profit beat estimates.

The Topix Banks Index sank 6.6 percent to lead declines among the 33 industry groups on the broader gauge. Mitsubishi UFJ Financial Group Inc., the nation’s largest lender, lost 5.5 percent before it reports earnings after the market closes.

Bear Market

A 2.9 percent surge on Friday pared the Topix’s January loss to 7.5 percent. The measure fell into a bear market on Jan. 20, buffeted by concerns of a slowdown in China and the rout in oil and other commodities.

Turmoil in global financial markets and the yen’s recent strength put pressure on the BOJ to adjust policy to drive price increases and growth in Japan.

Governor Haruhiko Kuroda’s board voted 5-4 to adopt an interest rate of minus 0.1 percent on a portion of current accounts held by financial institutions at the central bank. The BOJ also pledged to keep increasing the monetary base at an annual pace of 80 trillion yen ($659 billion), primarily by purchasing Japanese government bonds, exchange-traded funds and real-estate investment trusts.

Kuroda’s challenge has much in common with that of counterparts in developed nations where inflation rates have run below policy makers’ targets, in part because of the slump in oil prices. European Central Bank President Mario Draghi last month signaled more stimulus will come in March from that bank as the inflation mandate is crucial.

Fed Bets

The Federal Reserve also signaled last week that financial turmoil may pose risks to the U.S. economy, prompting futures traders to pare back bets on a rate increase for the world’s biggest economy in March to 14 percent.

Some 50 companies in the 1,934-member Topix report earnings Monday. Of the firms in the benchmark gauge that have posted results and for which Bloomberg has estimates, 52 percent missed analyst predictions for profit. That’s slightly worse than last quarter, when 50 percent reported profit below expectations.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying U.S. measure rose 2.5 percent on Friday, the strongest advance since Sept. 8, though still capping its worst start to a year since the height of the global financial crisis.

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