Topix Index Advances to Recover Losses From Lehman Crash

The Topix Index climbed the most in a month, erasing losses from the 2008 collapse of Lehman Brothers Holdings Inc., as Japanese markets reopened from a holiday during which the yen slid and U.S. jobs data beat estimates.

Sony Corp., Japan’s No. 1 exporter of consumer electronics, rose 6.4 percent. Toyota Motor Corp. added 4.9 percent after the Nikkei newspaper reported the carmaker will beat profit estimates when it posts results tomorrow. Japan Steel Works Ltd., which forges reactor containment vessels, surged 16 percent after Japan won its first nuclear plant order since the Fukushima meltdowns.

The Topix rose 3.1 percent to close in Tokyo at 1,188.57, a level not seen since before Lehman filed for bankruptcy protection on Sept. 15, 2008. Japan’s broadest gauge of equities has rallied 65 percent since mid-November, making it the world’s best-performing major stock index, as the yen weakened amid optimism a change in government and central bank leadership will pull Japan out of deflation.

“We saw solid U.S. jobs data even though the market was nervous about downside risks, and that’s boosting stock buying,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 5 trillion yen ($50.5 billion.) “As the yen has weakened, corporate forecasts suggest profits are going to improve a lot this year. The market likes that.”

After a record earthquake and tsunami, nuclear meltdowns and a surge in the yen, Japan is the last of the five biggest equity markets to recover to pre-crisis levels. Topix industry groups tracking consumer lenders and real estate companies led the recovery from the March 2009 bottom following Lehman’s collapse, almost quadrupling.

Nikkei 225

The Nikkei 225 Stock Average today climbed 3.6 percent to 14,180.24, closing above 14,000 for the first time since June 2008. The exporter-heavy gauge recouped its losses from the Lehman shock on March 9.

Hino Motors Ltd., a truckmaker majority owned by Toyota, climbed 675 percent to lead rebounding shares on the Nikkei 225 since the depths of the financial crisis. Tokyu Land Corp. jumped about 470 percent. Softbank Corp., the mobile-phone carrier headed by billionaire Masayoshi Son, increased almost 330 percent.

Futures of the S&P 500 index lost 0.1 percent today after the measure yesterday extended its record level following data last week that showed U.S. employers added more workers than forecast in April.

Earnings Season

Of the 284 companies on the Topix that have reported full-year earnings since April 1, and for which Bloomberg has estimates, 162 beat projections. Toyota and Hitachi Ltd. are among almost 700 companies on the measure scheduled to report earnings this week, according to data compiled by Bloomberg.

Bank of America Merrill Lynch raised its 12-month target for the Topix from 1,250 to 1,350, about 14 percent above today’s level. If the yen were to slide to 120 per dollar, the index could rise to 1,450, the brokerage said.

The yen is trading at 99.01 per dollar after weakening about 2 percent in the past three trading sessions.

Japanese exporters rallied. Sony gained 6.4 percent to 1,731 yen and Taiyo Yuden Co., a maker of capacitors for televisions and smartphones that makes 76 percent of its sales outside Japan, surged 9.2 percent to 1,502 yen. Komatsu Ltd., Japan’s largest construction machinery maker, rose 4.2 percent to 2,613 yen.

Japan Steel

Toyota advanced 4.9 percent to 5,760 yen, the highest since February 2008. The Nikkei newspaper said a weaker yen and improving overseas sales will help the world’s biggest carmaker post full-year operating profit of about 1.3 trillion yen, beating the mean analyst estimate of 1.24 trillion yen.

Japan Steel Works soared 16 percent to 579 yen, the biggest advance since October 2008, after Mitsubishi Heavy Industries Ltd. and Areva SA of France signed a $22 billion agreement on May 3 to build a nuclear power plant in Turkey. Mitsubishi Heavy added 4.9 percent to 684 yen.

Mitsui & Co., Japan’s second-biggest trading house, gained 4.3 percent to 1,374 yen after projecting a dividend of 51 yen per share, up 8 yen from a year earlier.

The Nikkei Stock Average Volatility Index added 2.5 percent to 24.80, indicating traders expect a swing of about 7.1 percent on the benchmark gauge during the next 30 days.

Before it's here, it's on the Bloomberg Terminal.