Nikkei 225 Closes Over 11,000 First Time Since April 2010

Japanese shares gained, with the Nikkei 225 Stock Average closing at its highest since April 2010, as positive earnings reports boosted the market.

Yahoo Japan Corp. surged 17 percent after the Internet company boosted its operating profit forecast and said it would buy back shares. Central Japan Railway Co. gained 6.6 percent after reporting a 49 percent gain in net income. Softbank Corp. advanced 3.6 percent after the Nikkei newspaper said the mobile carrier may post a record operating profit, boosted by sales of Apple Inc.’s iPhone. KDDI Corp. rose 3.1 percent after Credit Suisse AG named the phone-network operator as one of its top picks in Japan.

The Nikkei 225 gained 2.3 percent to 11,113.95 at the close in Tokyo, its highest level since April 30, 2010. The broader Topix Index climbed 1.5 percent to 934.67, headed for a five-month advance, the longest such streak since August 2009. All of the gauge’s 33 industry groups rose.

“Investors are starting to price in expectations of increasing earnings going forward for the next few years,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 6 trillion yen ($66 billion). “The yen is positive, but there’s also an increasingly better outlook for an economic recovery in places like China as well as in Japan. There are a lot of positive reasons why earnings should improve.”

Topix Rally

The Topix surged 29 percent from Nov. 14, when elections were announced, on optimism Prime Minister Shinzo Abe’s new government will take the necessary steps to fight deflation. The gauge is trading at 1.09 times book value, compared with 2.08 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Of the 33 companies on the Topix that have reported earnings so far this quarter and for which Bloomberg has estimates, 48 percent have exceeded profit expectations. For sales, 44 percent of 118 companies have beaten projections, according to Bloomberg data. Canon Inc. and NTT DoCoMo Inc. were among the companies that report earnings today, with 546 companies posting results this week.

Yahoo Buyback

Yahoo Japan jumped 17 percent to 37,250 yen, the biggest gain on the Nikkei 225. The company yesterday said raised its full-year operating profit forecast and said it will buy back as much as 1.4 percent of outstanding shares for 20 billion yen.

Central Japan Railway advanced 6.6 percent to 8,100 yen, its biggest advance since December 2008. The company reported a 49 percent jump in nine-month net income.

Softbank rose 3.6 percent to 3,175 yen. The carrier may post a record operating profit as sales of the iPhone increased and boosted mobile phone contracts, the Nikkei reported, without citing anybody.

KDDI advanced 3.1 percent to 6,730 yen, its highest since June 2008. The company was among those lagging behind Japan’s stock rally that was named a top pick by Credit Suisse.

Futures on the S&P 500 slid 0.1 percent today. The measure gained 0.5 percent yesterday to its highest level since December 2007 on better-than-forecast earnings from companies including Pfizer Inc. and Valero Energy Corp. The Dow Jones Industrial Average rose to a five-year high.

Volume on the Nikkei 225 was about 7.6 percent lower than its 30-day average for the time of day. The Nikkei Stock Average Volatility Index rose 4.7 percent to 23.76, indicating traders expect a swing of about 6.8 percent on the benchmark gauge over the next 30 days.

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