Japan Shares Advance Before U.S. Jobs Data as Banks, Autos Gain

  • Banks advance as some investors rotate out of defensive stocks
  • Yen hovers near one-month low vs. dollar before U.S. payrolls

Japanese shares rose ahead of an American jobs report Friday that’s expected to help clarify the outlook for U.S. interest rates and the direction of the yen.

Banks and automakers such as Toyota Motor Corp. and Nissan Motor Corp. advanced, as the yen hovered close to a one-month low against the dollar, at the trading close in Tokyo. The Japanese currency has lost 1.4 percent this week with investors betting on a sooner-than-expected rate increase by the Federal Reserve following Chair Janet Yellen’s hawkish remarks last Friday.

SecurityPercent ChangePrice
Topix+0.6%1,337.38
Nikkei 225+0.2%16,926.84
Yen-Dollar+0.1%103.28

“The market is enjoying the yen’s move to the 103 per dollar level after pricing in concerns over corporate earnings with the yen trading around 100 per dollar,” said Yoshihiro Okumura, general manager at Chibagin Asset Management Co. “Investor sentiment is favoring the anticipated widening of the gap between U.S. and Japanese interest rates, and signs of continued economic recovery.”

Despite a 3.8 percent rally this week, the Topix is still the second worst performer among developed markets, with a 14 percent decline year-to-date. It fell as much as 23 percent to the lowest this year on Feb. 12.

The least-loved stocks in Tokyo, such as banks, have been staging a comeback this week as the air goes out of a rally in defensive shares. A gauge tracking banks contributed most to the Topix’s gains on Thursday, climbing 1.6 percent, as investors’ concerns over bank earnings eased ahead of the Bank of Japan’s monetary policy meeting later this month.

The banks’ index, which is down 23 percent this year, has been hammered after the BOJ cut interest rates to negative, dealing a blow to lenders’ earnings.

  • Mitsubishi UFJ Financial Group Inc., the country’s largest lender extended its gains this week to 11 percent. The firm’s banking unit and its two biggest Japanese peers plan to sign a non-binding agreement with Saudi Arabian Oil Co. to expand lending to the state-run firm, people with knowledge of the matter said.

BankOne-Day GainWeighting on Bank Index
Mitsubishi UFJ Financial1.8%28%
Sumitomo Mitsui Financial1.5%18%
Mizuho Financial1.0%16%
  • Drugmaker Fuji Pharma Co. surged 9.4 percent. The company signed a pact with Mithra Pharmaceuticals for the commercialization of experimental contraceptive Estelle in Japan and ASEAN countries.
  • Oil explorers declined following a pullback in crude prices. Inpex Corp., which has a 87 percent weighting on a gauge tracking oil explorers, sank 2.6 percent, its biggest decline in a month.

Futures on the S&P 500 Index added 0.3 percent. The underlying measure slipped 0.2 percent on Wednesday. Yellen said last week the case for a U.S. rate hike has strengthened recently, after which traders put the chance of a U.S. rate increase as early as September at 36 percent, according to data compiled by Bloomberg.

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