Topix Caps Biggest Gain in Month on Weaker Yen, Earnings

Japan’s Topix index rose the most in almost a month, after U.S. equity measures climbed to records yesterday, as the yen extended declines against the dollar and earnings cheered investors.

Nissan Motor Co. jumped 5.1 percent after the automaker posted full-year net income that beat estimates and forecast higher dividends. Mitsubishi Materials Corp. surged 7.2 percent as the metals producer’s outlook for profit and dividends topped analyst predictions. Mitsubishi Chemical Holdings Corp. climbed 2.2 percent after a report it will buy a controlling stake in Taiyo Nippon Sanso Corp. Hitachi Ltd. sank 2.9 percent on unexpectedly forecasting a drop in profit.

The Topix advanced 1.8 percent to 1,178.35 at the close of trading in Tokyo, its largest gain since April 16. All but one of its 33 industry groups rose. The Nikkei 225 Stock Average added 2 percent to 14,425.44. The yen slid 0.2 percent to 102.29 per dollar after falling 0.3 percent yesterday.

“There’s relief because the yen is at weaker levels and the U.S. stock market was solid,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. “Companies that beat forecasts are being favored, and this is likely to continue.”

Futures on the Standard & Poor’s 500 Index climbed 0.1 percent. The gauge and the Dow Jones Industrial Average increased to all-time highs yesterday, while the Nasdaq Composite Index jumped the most since January as technology and small-cap shares rallied amid deals activity that boosted confidence in the world’s largest economy.

Earnings Season

Earnings season continues in Japan, with more than 650 companies on the Topix scheduled to post results this week. Of members that reported from April 1 through yesterday and for which Bloomberg had estimates, 56 percent beat analyst expectations for profit, data compiled by Bloomberg show.

Nissan added 5.1 percent to 913 yen, its biggest advance since June. The company reported net income of 389 billion yen ($3.8 billion) for the year ended March on better-than-expected fourth-quarter results. Nissan also forecast a 33 yen dividend per share for the fiscal year to March 2015, up from 30 yen the previous period.

Isuzu Motors Ltd. jumped 7.8 percent to 609 yen for the biggest gain on the Nikkei 225. The automaker said it will buy back about 10 billion yen of shares.

Mitsubishi Materials jumped 7.2 percent to 312 yen, its largest gain since August. The company forecast 50 billion yen in profit for the year ending March 2015, topping estimates for 45.2 billion yen. Mitsubishi Materials also projected full-year dividends of 8 yen a share, surpassing analyst predictions for 6.3 yen.

Sharp Advances

Sharp Corp. jumped 5 percent to 272 yen after forecasting profit would more than double as demand grows for its display technology used in high-end smartphones.

Mitsubishi Chemical gained 2.2 percent to 412 yen. Company spokesman Kenta Horie said the it will discuss a capital alliance with Taiyo Nippon Sanso at a board meeting today, confirming a report in the Nikkei newspaper.

Hitachi was the biggest drag on the Topix today, dropping 2.9 percent to 710 yen, its lowest close since Nov. 21. The company forecast full-year net income of 230 billion yen, lagging the 310 billion-yen average of 21 analyst estimates compiled by Bloomberg. The Japanese manufacturer of products from nuclear reactors to kitchen appliances projected falling revenue from its power and industrial-systems businesses after a unit merger with Mitsubishi Heavy Industries Ltd.

Chiyoda Corp. lost 5.5 percent to 1,282 yen after projecting profit that missed estimates. The plant-construction company forecast 13.5 billion yen in net income for the fiscal year ending March 2015. Analysts had expected 18.4 billion yen.

Worst Performer

Even after today’s advance, the Topix has fallen 9.5 percent this year, the most among major developed markets tracked by Bloomberg, as investors weighed whether Prime Minister Shinzo Abe and the central bank will succeed in fostering a sustained economic recovery.

The Topix traded at 1.15 times book value today, compared with 2.65 for the S&P 500 and 1.91 for the Stoxx Europe 600 Index yesterday. Volume on the Japanese gauge was about 2.8 percent higher than the 30-day average today.

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