Japanese Shares Extend Last Week’s Advance as Brexit Worries Ebb

  • Foodmakers and telecom shares provide biggest boost to Topix
  • Gauge trailing other Asian markets in the rebound after Brexit

Japanese stocks rose, led by food companies, amid speculation the central banks will step in to bolster markets after the Brexit vote in the U.K.

The Topix index added 0.6 percent to 1,261.97 at the close in Tokyo after falling as much as 0.6 percent. The measure jumped 4.2 percent last week to recoup more than half its losses after the U.K.’s decision to leave the European Union, as officials from England to Japan indicated they would act to stem the potential fallout. The yen slid 0.1 percent to 102.64 per dollar after gaining 0.7 percent on Friday. The Nikkei 225 Stock Average Index rose 0.6 percent to 15,775.80 on Monday. 

“People have started to understand that the economic impact of the Brexit may not be so huge judging by the size of the U.K. economy,” said Soichiro Monji, general manager for economic department at Daiwa SB Investments Ltd.

The recovery in Japanese stocks is slower than in other Asian markets, which have mostly retraced their losses following Britain’s shock vote. The Topix dropped 7.3 percent the day after the referendum as the yen soared to the highest level in almost two years. Japan’s equities are the second-worst performers this year among 24 developed markets tracked by Bloomberg, with the Topix down about 18 percent.

Continuing Rebound

“We’re simply continuing the rebound again,” said Seiji Iwama, a fund manager with Daiwa SB Investments. “The moves are lackluster because of the yen strength.” 

The second-quarter Tankan index of confidence among large manufacturers, a key barometer for business sentiment in Japan, was unchanged at 6 compared with the previous quarter. The data, released Friday, showed an currency rate assumption of 111 yen to the dollar. Japanese companies will start to release April-June quarter results at the end of July, which is a concern following the yen’s surge.

Telecommunications companies and food makers were the top contributors to the index’s gains, while banks and precision-instrument manufacturers were the biggest drags.

  • Japan Tobacco Inc. rose 4.6 percent, providing the largest single boost to the Topix. Nippon Telegraph & Telephone Corp. rose 2.9 percent for the second-largest contribution.

  • Takata Corp. climbed 3.8 percent. The air-bag maker said its president and board members will take pay cuts as it scrambles to contain recalls and find a way to restructure the business.

  • Konica Minolta Inc. sank 2 percent after SMBC Nikko Securities Inc. lowered its price target on the camera maker, saying precision-instruments companies will see the largest impact from Brexit among Japanese technology firms.

Futures on the S&P 500 Index added 0.3 percent. The underlying U.S. equity gauge advanced 3.2 percent last week on optimism global central banks will act to counter disruption in financial markets due to Brexit.

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