Most Japanese Stocks Gain as Investors Optimistic on U.S. Data

  • Credit Suisse follows BlackRock in lowering outlook on Japan
  • Automakers fall on stronger yen and weak U.S. sales data

Japan’s Topix index closed higher after fluctuating as investors weighed a strengthening yen with rising expectations that the Federal Reserve will take a gradual approach to raising U.S. interest rates.

The Topix rose 0.1 percent to 1302.71 at the close in Tokyo, having swung between a 0.7 percent loss and a 1 percent gain. Two stocks climbed for each that fell on the measure. The index dropped 4.7 percent last week, its worst weekly performance in two months. The Nikkei 225 Stock Average slipped 0.3 percent 16,123.27. The yen traded at 111.39 per dollar, strengthening for a second day. Strong U.S. manufacturing and jobs reports on Friday had little impact on speculation that the Fed will hold off from tightening policy until near the end of the year.

“American ISM figures were encouraging. The dollar-yen is falling for now because the Fed’s stance is taken as being a bit dovish, but that won’t continue into infinity,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “At some point the dollar will stop falling because investors will realize the U.S. economy is, after all, quite strong. And at that time we’ll could see a sudden rebound in the value of Japanese firms that do business globally.”

Odds of a Fed hike this month remained at zero even as data for last month showed that U.S. manufacturing expanded for the first time in seven months and more workers than expected were added to nonfarm payrolls, while the jobless rate crept higher as more people sought work. Expectations for a hike in June are at 24 percent, slightly higher from 20 percent prior to the economic data.

Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent after the underlying gauge added 0.6 percent on Friday to close at the highest level this year. Optimism in the U.S. economy and expectations for only gradual Fed tightening overshadowed a selloff in oil.

Japan Downgrade

Credit Suisse Group AG cut its outlook on Japanese shares from overweight to neutral, citing a stronger yen and slowing momentum for earnings. The move follows a similar decision from BlackRock Inc. last month.

Kaneka Corp. surged 6.8 percent after the Nikkei reported the chemical manufacturer has developed lithium-ion batteries that are 100 times faster than conventional technology and can charge mobile phones in 10 minutes.

Sharp Corp. jumped 4 percent after the Apple Inc. supplier on Saturday formally signed a rescue deal to sell a majority stake to Foxconn Technology Group. The company also said late Friday that it reached an agreement with its banks on loan terms.

Exporters led losses on Monday in Tokyo as the stronger yen and weaker-than-expected U.S. sales figures weighed on the sentiment of automakers. Toyota Motor Corp. and Nissan Motor Co. each fell at least 2.5 percent, while Mazda Motor Corp. tumbled 5.6 percent.

Sun Corp., which surged 97 percent last month, fell 2.9 percent. Shares of the Japanese firm have risen on speculation the company’s Israeli unit is helping the FBI crack iPhones.

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