Japan Stocks Rise in Volatile Session After U.S. Jobs Report

Updated on
  • DeNA surges as Nikkei Inc. says will add shares to Nikkei 225
  • China central bank chief says stock rout is close to ending

Japanese stocks rose, with the Topix index swinging between gains and losses at least 15 times, after a U.S. payrolls report gave little comfort to investors seeking direction on when the Federal Reserve will raise interest rates and as trading in China resumed after a holiday.

Toshiba Corp. gained 1.8 percent after reporting earnings following a delay after facing an accounting scandal. Builder Haseko Corp. added 1.6 percent and social media site operator DeNA Co. jumped 8.7 percent after the index compiler Nikkei Inc. said it would add the companies to the Nikkei 225 Stock Average. SoftBank Group Corp. and Japan Tobacco Inc. were the biggest drags on the Topix index.

The Topix index added 0.1 percent to 1,445.65 at the close in Tokyo, swinging from a loss of 1.9 percent. About five shares rose each three that fell, after the measure on Friday capped its longest losing weekly streak since February 2014. The Nikkei 225 gained 0.4 percent to 17,860.47. The yen fell 0.3 percent to 119.34 per dollar after strengthening 0.9 percent on Friday. China’s Shanghai Composite Index fluctuated between a jump of 1.8 percent and a decline of 1.9 percent as trading resumed following holidays last week.

“In reality no one, including I, think the FOMC members are closer to knowing whether they will raise rates in September,” said Andrew Sullivan, head of sales trading at Haitong International Securities Group Ltd. in Hong Kong. “The U.S. jobs data make it a 50:50 call. Anyone that is short is likely to be cautious and try to lock in gains. We really need to see what happens over the next few days.”

U.S Futures

Futures on the Standard & Poor’s 500 Index gained 0.9 percent after the underlying measure dropped 1.5 percent on Friday, capping its second-worst weekly performance since December. U.S. markets are closed on Monday for a holiday.

Data Friday showed U.S. employers added 173,000 workers in August and the jobless rate dropped to 5.1 percent. The gain in payrolls, while less than forecast, followed advances in July and June that were stronger than previously reported. The unemployment rate was the lowest since April 2008.

Fed Rates

The jobs report was the last major data point before the Fed meets on Sept. 16-17 to discuss the timing of its first increase in interest rates in nearly a decade. Investors raised bets on a September liftoff to 30 percent from 26 percent before the jobs data. That’s still less than the 48 percent odds predicted before China devalued the yuan on Aug. 11.

“We’re seeing the negative effects from China and emerging economies,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “The U.S. has started seeing that there’s a risk of contagion as China’s economy slows. The jobless rate fell, but labor participation was weaker. I think a rate hike in September will be difficult.”

Underlying Solidarity

Mainland Chinese markets reopened Monday after a two-day holiday at the end of last week. Senior Chinese officials have telegraphed confidence in their economy’s underlying solidity, predicting a stabilization in their stocks and currency in a presentation set to be tested in coming weeks.

With concerns about China’s outlook helping trigger the biggest monthly sell-off in global stocks in more than three years in August, a gathering of Group of 20 finance chiefs in Turkey on Friday and Saturday focused on China’s efforts to shore up its economy. People’s Bank of China Governor Zhou Xiaochuan said in a statement that the rout in Chinese equities is close to ending, and that state intervention prevented systemic risk and stopped a free-fall.

Toshiba gained 1.8 percent after posting an annual loss of 37.8 billion yen ($318 million) and restating earnings for the previous six years as it tries to recover from an accounting scandal. The loss was within range of what investors had been expecting, said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo.

Haseko gained 1.6 percent while DeNA surged 8.7 percent. The two companies will be added to the Nikkei 225 at the end of the month, replacing Nitto Boseki Co. and Heiwa Real Estate Co. Nitto Boseki plunged 19 percent and Heiwa slumped 14 percent.

Japan Tobacco lost 1.8 percent and SoftBank declined 1.6 percent. Glass and ceramic manufacturers led declines among the Topix’s 33 industry groups, falling 1.5 percent. Warehouses and transport companies led gains.