- December machine order jump 15%, dwarfing 1.9% forecast
- Bank of Japan forecast to maintain stimulus at two-day meeting
Japanese stocks rose to the highest in a month as machine orders surged more than expected and the yen weakened as the central bank began reviewing monetary policy.
The Topix index jumped 1.5 percent to 1,379.95 in Tokyo, a third day of gains and the highest close since since Feb. 8, as more than nine shares rose for each that fell. The gauge posted its first weekly decline in four weeks last week, after jumping 15 percent over the preceding three weeks. The Nikkei 225 Stock Average added 1.7 percent to 17,233.75 on Monday. The yen traded at 113.80 to the dollar after losing 0.6 percent on Friday, when it also fell against the euro.
"The machine orders results should be a boost to stocks," Masaaki Yamaguchi, a Tokyo-based equity market strategist at Nomura Holdings Inc., said by phone. "It’s not just this one indicator that’s moving the market, but globally we’re moving toward a more risk-on stance, so it’s helping within that move."
Insurers and banks led gains among the 33 Topix industry groups after financial stocks gained in Europe on Friday. Dai-ichi Life Insurance Co. surged 8.6 percent, while Mitsubishi UFJ Financial Group Inc. added 4.4 percent. Carmakers, retailers and electrical appliance manufacturers were among the biggest boosts to the Topix. Kanamoto Co., which leases construction machinery, advanced 6.4 percent. Nippon Kayaku Co. sank 8.3 percent after Nomura Holdings Inc. cut its rating on the chemical producer to neutral from buy.
Volume on the Topix was 28 percent lower than the 30-day average.
"European bank stocks rose at the end of last week, and I expect Japanese bank stocks to be bought back as well," said Yoshinori Ogawa, market strategist at Okasan Securities Co. "I expect sectors that’ll benefit from the weaker yen against the euro to be bought back."
Japan’s core machine orders jumped 15 percent in January from a month earlier, beating December’s 4.2 percent increase and higher than economist forecasts for a 1.9 percent gain.
Investors last week warmed to measures taken by the European Central Bank to boost economic growth, with the focus now turning to the Bank of Japan and the Federal Reserve, which update on policy this week.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent. The underlying U.S. equity gauge closed on Friday at the highest level this year as investors reassessed stimulus measures in Europe.
The BOJ began a two-day meeting to review monetary policy Monday. Thirty-five of 40 economists surveyed by Bloomberg forecast the bank will keep policy unchanged. The Federal Open Market Committee is scheduled to make its rate decision on Wednesday. Fed funds futures indicate there’s only a 4 percent chance the Fed will hike borrowing costs this week, down from 12 percent at the start of this month.
"The pessimistic mood has retreated for now, and it looks like the U.S. economy itself won’t miss the mark in any major way," said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset in Tokyo.