Japanese Stocks Rise After Global Rally as Central Bank Meets

  • Investors assess historic trade agreement for Pacific rim
  • Bank of Japan expected to maintain stimulus at two-day meeting

Japanese stocks rose following a global rally as the nation’s central bank began a two-day meeting and investors assessed the impact of an historic accord to ease trade in among a dozen Pacific-rim nations.

Fishing, agriculture, and forestry-related stocks gained the most among the Topix index’s 33 industry groups, with seed wholesaler Sakata Seed Corp. surging 9 percent. Mitsubishi Corp. advanced 0.7 percent, building on Monday’s 5.2 percent rally, after SMBC Nikko Securities Inc. said the trading house and its peers are among the likely winners from the trade accord. Mayonnaise maker Kewpie Corp. jumped 4.3 percent after reporting nine-month operating profit rose 15 percent. Tokai Tokyo Financial Holdings Inc. tumbled 7.2 percent as Credit Suisse Group AG cut its rating on the securities firm.

The Topix added 0.8 percent to 1,475.84 at the close in Tokyo, rising for a fifth day. The Nikkei 225 Stock Average climbed 1 percent to 18,186.10. U.S. stocks staged the longest rally of the year as last week’s weaker-than-expected jobs report fueled speculation the Federal Reserve will keep interest rates lower for longer, boosting riskier assets.

“It’s not just in Japan, but globally stocks are rising as investors have to reverse their risk-off positions on expectations the Fed will hold off on raising interest rates,” said Norihiro Fujito, general manager of Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “Expectations ahead of the Bank of Japan’s announcement tomorrow is a secondary reason we’re seeing gains today.”

The Bank of Japan officials began a two-day monetary policy meeting Tuesday, with only two of 36 economists expecting the central bank to expand monetary stimulus, according to a Bloomberg News survey conducted last week. Fifteen expected easing at the following meeting on Oct. 30.

Trade Accord

Japan, the U.S. and other Pacific-rim nations  that make up about 40 percent of the world economy finalized the Trans-Pacific Partnership agreement in Atlanta on Monday. The accord is still pending approval by lawmakers in each country. Should it get the green light, it will guarantee intellectual property rights for drugmakers while reducing tariffs on goods from food to cars. American farmers will get to sell more rice to Japan, while Japanese automakers will have lower barriers for entry to the U.S. market.

The agreement “has plenty of possibility to become a big deal for the U.S. and Japan,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo, said by phone. “Concerns over the global economy had become ingrained in the market’s mindset. It’s possible that the TPP has triggered some regret over having sold too much.”

Sakata Seed

Sakata Seed surged 9 percent, the most since 2013. Bank of America Corp. said the company is one of the potential beneficiaries of the trade accord, citing better demand for agricultural products. The brokerage also highlighted benefits to automakers such as Isuzu Motors Ltd. as lower tariffs may boost exports. Isuzu rallied 2.8 percent.

Analysts at SMBC Nikko said trading houses, distributors and warehouse operators stood to benefit from the accord. Mitsubishi added 0.7 percent, while Kamigumi Co. advanced 2.9 percent.

Kewpie jumped 4.3 percent after saying nine-month operating profit rose 15 percent to 21.2 billion yen ($176.3 million). The mayonnaise maker left its full-year forecasts unchanged.

Tokai Tokyo tumbled 7.2 percent after Credit Suisse cut its rating to underperform from neutral, citing worries over its international stock-trading operations and sales of mutual funds.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.4 percent after the underlying gauge rallied 1.8 percent in New York on Monday.

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