Japan Shares Rise After Holiday as Yellen Lifts Optimism

Japanese shares rose, with the Topix index posting its biggest three-day advance in seven months, after comments by Federal Reserve Chairman Janet Yellen boosted optimism for the world’s biggest economy.

All but one of the Topix’s 33 industry groups gained. Honda Motor Co., which counts North America as its biggest market, added 3.3 percent. Nippon Express Co. jumped 4.6 percent after Nomura Holdings Inc. recommended the transport company’s shares. Sony Corp. climbed 3.7 percent after a report it may provide more camera components to Apple Inc. for a new iPhone. Chiyoda Corp. dropped 3.2 percent after the engineering company’s profit slid.

The Topix gained 1.3 percent to 1,219.60 at the close in Tokyo. The measure rose 4.9 percent in last three trading sessions, the biggest such advance since July. The Nikkei 225 Stock Average added 0.6 percent today to 14,800.06. Shares extended gains after Chinese trade data beat estimates. The yen traded at 102.51 per dollar after falling 0.4 percent yesterday.

“Yellen suggested the U.S. economy is recovering and a low interest-rate policy will remain, and that’s giving a sense of relief to the market,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-biggest lender. “Compared to the U.S., Japanese share valuations are cheap.”

Stock markets in Japan were closed yesterday for a public holiday. The Topix traded at 1.21 times book value today, compared with 2.58 for the Standard & Poor’s 500 Index yesterday. The Japanese gauge’s price-to-estimated earnings ratio was 14.69 today, compared with 15.44 for the U.S. benchmark yesterday.

Machinery Orders

Shares rose even after Cabinet Office data showed the country’s core machinery orders fell 15.7 percent in December from a month earlier, the most since February 1998. Economists surveyed by Bloomberg had expected a 4 percent decline. Orders rose 6.7 percent on the year, compared with economist predictions for a 17.4 percent increase.

Data showed China’s imports and exports last month exceeded the most optimistic forecasts among analysts surveyed by Bloomberg. Overseas shipments rose 10.6 percent from a year earlier, the General Administration of Customs said today in Beijing, a pace that may be distorted by fake invoices and holidays and compares with the median projection of economists for a 0.1 percent gain. Imports advanced 10 percent, leaving a trade surplus of $31.9 billion, the widest for January since 2009.

Futures on the S&P 500 rose 0.2 percent today. The equity measure gained 1.1 percent yesterday, giving the benchmark index its biggest four-day rally in more than a year.

Yellen Testimony

“I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level,” Yellen said.

The Federal Open Market Committee has twice reduced the size of the monthly asset-purchase program, cutting bond buying to $65 billion from $85 billion.

“Yellen kept things steady for tapering which is bullish for the U.S. dollar given the deceleration of its dilution and bearish for the yen,” said Gavin Parry, managing director of Hong Kong-based brokerage Parry International Trading. “This is positive for Japanese cash equities given its export orientation.”

Exporters Gain

Honda, which gets about 80 percent of its revenue abroad, added 3.3 percent to 3,834 yen. Nissan Motor Co., which counts North America as its biggest market for sales, rose 2 percent to 903 yen. Canon Inc., the world’s biggest camara maker, gained 1.2 percent to 3,046 yen.

Toyota Motor Corp., the world’s biggest carmaker, climbed 0.4 percent to 6,020 yen even after recalling 1.9 million Prius cars globally to update control software.

Nippon Express rose 4.6 percent to 480 yen, the biggest advance on the Nikkei 225. The door-to-door delivery service was upgraded to buy at Nomura, which also boosted its target price to 560 yen.

Sony jumped 3.7 percent to 1,765 yen. The company may provide more image sensor components to Apple for a new iPhone, the Nikkei newspaper reported.

Chiyoda, which constructs plants around the world, slumped 3.2 percent to 1,501 yen, the steepest decline on the Nikkei 225. The company reported a 6 percent drop in nine-month net income to 11.35 billion yen ($110.8 million), while maintaining its 16 billion yen full-year profit forecast, 0.5 percent lower than the previous year’s results.

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