Japan Stocks Rise on ECB Bond Pledge, U.S. Economic Data
Japanese shares rose, with the Nikkei 225 (NKY) Stock Average gaining a second day, after European Central Bank President Mario Draghi said it stands ready to buy bonds and as U.S. economic data beat expectations.
Brother Industries Ltd. (6448), an office-equipment company that gets almost 30 percent of its sales in Europe, climbed 2.5 percent. Funai Electric Co., a maker of audio-visual equipment that relies on North America for half its revenue, jumped 3.8 percent on U.S. jobless claims and factory orders that beat expectations. EAccess Ltd. (9427), a telecom that is being bought by Softbank Corp. soared 42 percent after the trading limit on the stock was lifted. The shares rose 212 percent this week.
The Nikkei 225 gained 0.4 percent to 8,863.30 at the 3 p.m. close, paring a weekly drop of 0.1 percent, its third week of declines. The gauge fell as much as 0.2 percent earlier today after the Bank of Japan refrained from adding to last month’s stimulus. The broader Topix (TPX) Index added 0.2 percent to 737.13, with almost two shares rising for each that fell.
“Draghi’s remarks reduced uncertainty in the market and the U.S. data shows the economy isn’t deteriorating, fueling confidence among investors,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($421 billion) in assets. “Market expectations for more easing by the BOJ were unexpectedly strong. It’s a mystery why investors were looking for more stimulus even after the central bank eased policy last month.”
Shares earlier reversed gains after the BOJ kept its asset- purchase fund, the main policy tool amid near-zero rates, at 55 trillion yen ($700 billion), the bank said in a statement in Tokyo today. The outcome was predicted by all 20 economists surveyed by Bloomberg News.
The yen strengthened versus most of its 16 major counterparts and pared a weekly decline versus the dollar, after the BOJ stimulus at the conclusion of a meeting today.
The Topix has risen 2.5 percent since Sept. 6, after the ECB started a global wave of easing to curb a slowdown in growth, with the U.S. Federal Reserve and the Bank of Japan also adding stimulus measures. The price of shares on the Topix stood at 0.9 times book value, compared with 2.3 times for the Standard & Poor’s 500 Index and 1.5 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.
Stocks gained after the ECB’sDraghi said the central bank is ready to start buying government bonds of indebted euro nations as soon as the necessary conditions are fulfilled. The ECB yesterday kept its benchmark interest rate unchanged at a historic low of 0.75 percent.
Brother Industries advanced 2.5 percent to 733 yen. Nippon Sheet Glass Co., which generates about 40 percent of its sales in Europe, climbed 3.3 percent to 62 yen.
“Although Draghi is just reiterating the ECB’s stance to support debt-burdened countries, the market is responding positively to his remarks,” said Kiyoshi Ishigane, a Tokyo- based strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion. “The U.S. data shows the economy is on more solid ground, with factory orders beating estimates. Even though the U.S. economy isn’t recovering across the board, more investors are optimistic.”
Futures on the S&P 500 (SPXL1) added 0.1 percent today. The index rose 0.7 percent in New York yesterday after the Labor Department said applications for jobless benefits rose 4,000 to 367,000 in the week ended Sept. 29, beating expectations of 370,000 claims, according to the median estimate in a Bloomberg survey.
Orders placed with U.S. factories fell 5.2 percent in August, the Commerce Department said, short of a 5.9 percent decline projected by economists polled by Bloomberg survey.
A government report today is expected to show the world’s biggest economy created 115,000 jobs last month and the unemployment rate rose to 8.2 percent from 8.1 percent, economists estimated. The Federal Reserve in September pledged to buy mortgage-backed securities until the U.S. labor market recovers.
Funai Electric jumped 3.8 percent to 1,006 yen. Toyo Tire & Rubber Co., which gets a third of its sales in North America, climbed 2.1 percent to 194 yen.
EAccess surged 42 percent to 47,000 yen, rising for a fifth day, after Softbank, Japan’s third-biggest mobile carrier, said on Oct. 1 it will acquire eAccess for $2.3 billion, three times the company’s market value.
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