Japanese Shares Advance on U.S. Economic Optimism, Yen

Japanese shares rose, with the Topix index advancing for the first time in three days, after a better-than-forecast U.S. jobs report added to signs of growth in the world’s biggest economy and weakened the yen.

Honda Motor Co., which gets more than 80 percent of its sales abroad, climbed 1.7 percent. Yokogawa Electric Corp. jumped 6.4 percent after the chipmaker raised its net-income outlook. Furukawa Electric Co. fell the most on the Nikkei 225 Stock Average after the cable maker maintained a profit forecast that missed analyst estimates. Marubeni Corp., a trading company that finalized its takeover of Gavilon Group LLC in July, lost 4.2 percent after cutting its profit estimate for the U.S. grain distributor by almost two-thirds.

The Topix gained 0.8 percent to 1,185.65 at the close in Tokyo. The measure last week fell 0.6 percent to a one-month low. The Nikkei 225 today rose 1.3 percent to 14,269.84. The yen traded at 99 per dollar after sliding 1 percent to 99.05 on Nov. 8, its biggest decline in seven weeks.

“Expectations for the U.S. economic recovery have thrust aside any concerns for the tapering of quantitative easing,” said Toshiyuki Kanayama, a senior market analyst at Monex Securities Inc. “With the yen being in the 99 range to the dollar, and with the Dow Jones Industrial Average reaching a high again, we’re likely to see widespread buying of Japanese shares.”

U.S. employers added 204,000 workers last month after a revised 163,000 gain in September that was larger than previously estimated, Labor Department figures showed Nov. 8. The increase in payrolls topped the most optimistic forecast in a survey of economists and spurred a 1.3 percent advance for the Standard & Poor’s 500 Index, while the Dow closed at a record.

Taper Timeframe

Futures on the S&P 500 dropped 0.1 percent today after gaining 1.3 percent on Nov. 8. The Federal Reserve will pare the monthly pace of bond buying to $70 billion at a March 18-19 meeting from the current $85 billion, according to the median of 32 economist estimates in a Bloomberg News survey last week.

Honda gained 1.7 percent to 3,935 yen. Nissan Motor Co., which counts North America as its biggest market, rose 1.6 percent to 897 yen. Canon Inc., the world’s biggest camera maker, rose 0.5 percent to 3,100 yen.

The Topix trailed the 23 other developed markets tracked by Bloomberg in October, rising less than 0.1 percent, after Prime Minister Shinzo Abe decided to implement a sales-tax increase starting in April. The measure remains the best performer in the group this year as unprecedented monetary easing by the Bank of Japan weakened the yen, improving the profit outlook for exporters.

Company Profits

Earnings season continues in Japan with more than 300 Topix companies reporting this week, according to data compiled by Bloomberg. Profit per share on the gauge is expected to increase 45 percent from the previous quarter, according to analyst projections compiled by Bloomberg.

Of the 255 companies that have reported quarterly earnings and for which Bloomberg has estimates, 61 percent beat profit expectations, data compiled by Bloomberg show.

Yokogawa Electric rose 6.4 percent to 1,328 yen, the biggest gain since May 21. The company raised its full-year net-income forecast by 7.4 percent to 14.5 billion yen, while also boosting its outlook for operating profit 6.2 percent.

Citizen Holdings Co. jumped 7.1 percent to 722 yen, the steepest advance on the Nikkei 225. The watchmaker raised its full-year profit projection to 13 billion yen, beating the 12.6 billion yen average estimate of 10 analysts surveyed by Bloomberg.

Furukawa Electric

Furukawa Electric sank 7 percent to 226 yen, its biggest drop since May 23. The company posted a 11 percent decline in net income to 2.3 billion yen and maintained its full-year forecast at 5 billion yen, missing the 6.7 billion yen estimate of 10 analysts.

Marubeni dropped 4.2 percent to 716 yen. Gavilon may post net income of 5.4 billion yen to 5.5 billion yen in the fiscal year ending March 31, with profit crimped by a drought in the U.S. last year, Marubeni Chief Financial Officer Yokihiko Matsumura said at a briefing in Tokyo on Nov. 8. Matsumura in August forecast more than 15 billion yen in profit from Gavilon this year, with gains expected from a revaluation of the asset.

Data today showed Japan’s current account surplus unexpectedly expanded in September to the widest since April as a weaker yen boosted the value of overseas investment income. The surplus rose 14.3 percent from a year earlier to 587 billion yen ($5.9 billion), against a median estimate for a 401 billion yen gap in a survey of 24 economists. The income surplus gained 24.6 percent to a record for September, boosted by higher interest receipts and dividends from foreign investments.

The Topix traded at 1.22 times book value today, compared with 2.56 for the S&P 500 and 1.80 for the Stoxx Europe 600 Index on Nov. 8. The Japanese measure’s 30-day volatility was 16.7 today, compared with its five-year median of 19.1.

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