Japan Topix Extends Rally on U.S. Earnings, Europe Tests

Japanese stocks rose, after the Topix index posted its biggest weekly rally in 18 months, amid optimism over U.S. earnings and after the European Central Bank gave most lenders a clean bill of health.

Tokyo Electric Power Co. jumped 17 percent on a report the utility’s profit may nearly triple. JSR Corp., a maker of synthetic rubber for auto tires, soared 6.5 percent after announcing a share buyback. Fanuc Corp. fell 4.3 percent as the maker of factory robots reported results.

The Topix advanced 1 percent to 1,254.28 at the close in Tokyo. The measure posted a 5.5 percent rebound last week after entering a correction amid concern about an ailing European economy, the timing of Federal Reserve interest-rate increases and the spread of the Ebola virus. The Nikkei 225 Stock Average added 0.6 percent to 15,388.72 today.

“U.S. earnings are not bad and I’m relieved that a slowdown in Europe hasn’t weighed on them much,” said Osamu Koizumi, Tokyo-based executive officer at Meiji Yasuda Asset Management Co., which oversees about 2 trillion yen ($19 billion) in assets. “The market here has been stabilizing on a rebound.”

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The equity measure added 0.7 percent on Oct. 24, capping a 4.1 percent weekly surge, as companies from Procter & Gamble Co. to Microsoft Corp. climbed after reporting earnings. The Fed and the Bank of Japan are scheduled to announce policy decisions this week.

Stress Test

The European Central Bank gave most lenders a clean bill of health with its study of bank balance sheets showing that none of the region’s largest lenders lacked the ability to withstand times of economic stress.

The Topix index tumbled 7.7 percent through last week from a six-year high in September, pushing short-selling on Tokyo’s bourse this month to the highest level on record. Since 2009, shares have rallied an average 9.7 percent over the three months following surges in bearish bets, according to data compiled by Bloomberg.

Of the companies on the Topix that released quarterly results from the start of this month through last week and for which Bloomberg had estimates, 64 percent missed earnings expectations. Some 580 companies listed on the Topix are scheduled to report results this week, according to data compiled by Bloomberg.

Profit Jump

Tokyo Electric jumped 17 percent to 395 yen, the most since July 2013, after the Nikkei newspaper reported the utility’s full-year profit may nearly triple to 125 billion yen ($1.2 billion) without saying where it got the information.

JSR soared 6.5 percent to 1,875 yen after saying it plans to buy back up to 2.1 percent of its shares for as much as 10 billion yen from Oct. 28 to Jan. 21.

Fanuc fell 4.3 percent to 17,910 yen, the most since Feb. 4, after saying its second-quarter orders fell to 134.5 billion yen from 142 billion yen in the previous three months, according to presentation material released on Oct. 24.

Fujifilm Holdings Corp. gained 2.9 percent to 3,691 yen after it agreed to acquire U.S. vaccine maker Kalon Biotherapeutics LLC. It decided to buy 49 percent of Kalon and plans to acquire the remaining stake in the future, Fujifilm spokesman Takahiro Taguchi said, confirming an earlier report by the Nikkei.

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