Japan Stocks Rise as Automakers Rise, Oil Explorers Drop

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Japan’s Topix Index fell, capping the worst three-day start to the year since 2008. Energy producers slumped as a plunge in oil prices continued, while carmakers rebounded.

Crude explorers Japan Drilling Co. and JX Holdings Inc. each sank at least 2.3 percent. Ryohin Keikaku Co., operator of the Muji brand, tumbled 9 percent after earnings missed estimates. Toyota Motor Corp. rose 1.5 percent, the biggest boost to the Topix, after the auto manufacturer dropped 2.8 percent yesterday. Takata Corp. jumped 7 percent after lender Sumitomo Mitsui Financial Group Inc. said it was ready to support the crisis-ridden auto air-bag maker if needed. Sony Corp. climbed 5.3 percent after announcing its movie “The Interview” generated record online sales.

The Topix fell 0.1 percent to 1,359.80 at the close in Tokyo, finishing the first three days of the year with a loss of 3.4 percent. The Nikkei 225 Stock Average was little changed at 16,885.33. The yen fell 0.4 percent to 118.91 per dollar after yesterday gaining 1 percent, the most in three weeks. West Texas Intermediate oil futures fell a fifth day, dropping as much as 1.5 percent to $47.20 a barrel.

“Investors have some legitimate concerns over global growth, but mostly world markets are having a fairly illogical panic attack because oil is a massive cost input,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “Japan is one of the most exposed markets to oil because it’s got its nukes switched off, which were 30 of percent of the electricity supply, so it should actually be doing very well in the context of developed markets.”

Oil Glut

U.S. crude inventories probably rose by 700,000 barrels last week, a Bloomberg News survey showed ahead of a government report today. The decline of oil prices to the lowest levels in more than five years is putting pressure on energy companies, related investment projects and the economies of nations that export the commodity.

An index of energy stocks in the Topix fell for an eighth day. Japan Drilling slid 2.4 percent to 4,280 yen, while JX Holdings fell 2.3 percent to 443.8 yen.

Muji brand operator Ryohin Keikaku plunged 9 percent to 13,430 yen, the most since October 2011, after third-quarter sales and operating profit were lower than expected.

Short-selling on Tokyo Stock Exchange surged to a record 37.8 percent yesterday, according to data from the exchange. Paper makers, metal producers and textile manufacturers were the most shorted stocks.

Toyota, Takata

Toyota today gained 1.5 percent to 7,407 yen, following losses of 5.2 percent over the previous four trading sessions. The automaker announced yesterday that U.S. sales missed estimates in December.

Takata surged 7 percent to 1,632 yen after the show of support from lender SMFG. The shares have gained more than 20 percent since Christmas as the company tried to move past the on-going scandal with faulty air bags linked to deaths.

Sony soared 4.6 percent to 2,552.5 yen after announcing the ’The Interview’ generated more than $31 million in online sales, a record for the studio. The company separately unveiled new products ranging from a high-definition hand-held camera to a revamp of its iconic Walkman music player priced around $1,200.

Ten-year U.S. treasury notes slid below 2 percent yesterday, the lowest level since May 2013. The Federal Reserve will release minutes today from its last policy meeting at which it pledged patience in raising interest rates. The Institute for Supply Management’s non-manufacturing index fell to 56.2 in December, below analyst estimates of 58.

“The U.S. non-manufacturing data was worse than expected, slightly setting back the optimistic outlook on the U.S. economy,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo. “Oil’s speedy decline is putting oil-producing countries in a really tough spot, but it’s a plus for the Japanese and U.S. economies.”

Global Volatility

Futures on the Standard & Poor’s 500 Index rose 0.3 percent today after the underlying gauge lost 0.9 percent yesterday. The Chicago Board Options Exchange Volatility Index jumped 6 percent, rising above 20 for the first time since mid-December as U.S. stocks extended the longest losing streak in more than a year.