Japan’s Topix Caps Longest Weekly Winning Streak in Year

Japan’s Topix index capped a fifth weekly advance, its longest stretch of gains in almost a year. The measure closed little changed today, with developers and carmakers rising while oil and producers fell.

The Topix slipped less than 0.1 percent to 1,268.92 at the close in Tokyo. The gauge rose 2 percent on the week, posting its longest winning streak since the five weeks ended July 19. The Nikkei 225 Stock Average today slid 0.1 percent to 15,349.42. Data showed fewer Americans filed applications for unemployment benefits last week.

“The outlook for the global economy is looking brighter, led by the U.S., and it’s becoming more obvious that Japanese shares need to catch up,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. Still, there are signs that “Japanese equities are overheating in the short term.”

Mitsubishi Estate Co., Japan’s biggest developer by market value, jumped 1.5 percent. Isuzu Motors Ltd. climbed 3.6 percent after JPMorgan Chase & Co. recommended the truckmaker’s shares. Cosmo Oil Co. sank 1.8 percent as its industry group posted the biggest decline among the 33 Topix sectors.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent. The equity measure advanced to a record yesterday as the Federal Reserve’s policy statement fueled optimism that the economic recovery will accelerate.

A U.S. report showed initial claims for unemployment benefits dropped by 6,000 people to 312,000 in the week to June 14, while a Bloomberg gauge of the U.S. outlook showed Americans are the most optimistic about the economy’s prospects in a year.

Real Estate

A measure of property shares rose 1.5 percent to lead gains among the Topix’s industry groups. Mitsubishi Estate advanced 1.5 percent to 2,570 yen, while Mitsui Fudosan Co. climbed 1.6 percent to 3,526 yen.

A revision in the condominium rebuilding act making it easier for companies to sell or tear down old condos passed the Upper House of the Diet on June 18, and is expected to take effect around December, the Nikkei newspaper reported yesterday.

This is “highly appealing” for major real-estate firms, Morgan Stanley MUFG Securities Co. analyst Tomoyoshi Omuro wrote in a report.

Isuzu Motors gained 3.6 percent to 695 yen, its highest close since August. JPMorgan initiated coverage of the automaker with an overweight rating and a target price of 800 yen.

Oil and gas producers posted the biggest drops among the Topix subsectors. Cosmo Oil lost 1.8 percent to 219 yen, and Idemitsu Kosan Co. slid 2 percent to 2,175 yen.

Worst Performer

Even after a 10 percent rebound from its May 21 low, the Topix is still the worst performer this year among 24 developed markets tracked by Bloomberg. The measure capped a world-beating rally last year as the central bank pressed ahead with record monetary easing.

The Topix traded at 1.2 times book value today, compared with 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index yesterday. Volume on the Japanese measure was 46 percent higher than the 30-day average today.

The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, today rose to its highest level since May 2013, signaling to some investors that shares have climbed too far, too fast. The Topix’s 14-day Relative Strength Index rose to about 75 yesterday. A reading above 70 indicates stocks may be poised to drop.

“In the short term, the RSI shows that it’s in the ‘overbought’ zone,” said Gavin Parry, managing director of Hong Kong-based brokerage Parry International Trading Ltd.

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