Japanese Stocks Gain First Time in Three Days as Drugmakers Rise

  • Odds of U.S. rate-hike delay until 2016 at highest this year
  • Sumitomo Mitsui Construction rebounds from Wednesday slump

Japanese stocks rose for the first time in three days as pharmaceutical stocks and tiremakers led gains. Sumitomo Mitsui Construction Co. soared.

Sumitomo Mitsui Construction surged 24 percent to lead gains on the Topix index. The stock tumbled Wednesday after a report that an apartment building in Yokohama was constructed based on falsified data. Asahi Kasei Corp. dropped 14 percent, the most in 16 years, after saying its unit altered data in a project for Sumitomo Mitsui Construction and will bear the costs. Drugmaker Daiichi Sankyo Co. added 5.1 percent and tiremaker Bridgestone Corp. gained 3.5 percent.

The Topix rose 1.4 percent to 1,490.72 at the close in Tokyo, swinging from a loss of 0.6 percent. About seven shares gained for each that fell. The Nikkei 225 Stock Average added 1.2 percent to 18,096.90, also reversing earlier losses. The yen traded at 118.94 per dollar after strengthening for the past three days as investors became more certain the Federal Reserve will hold off on raising U.S. interest rates.

“The U.S. is unlikely to raise rates anytime soon and that is the reason why markets are firmer,” said Andrew Clarke, director of trading at Mirabaud Asia Ltd., a Hong Kong brokerage. “Interest rates are not going up, more stimulus is coming, or so they hope, and the stock markets go higher.”

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index added 0.6 percent after the underlying gauge fell 0.5 percent on Wednesday, marking its first back-to-back declines in more than two weeks. Investors are anxious about corporate profits as Wal-Mart Stores Inc. predicted earnings will decline next year and quarterly results from JPMorgan Chase & Co. disappointed.

Risk aversion dominated in the U.S. session with a weaker-than-expected increase in retail sales compounding the steepest drop in Wal-Mart stock for more than 27 years.

The odds that a U.S. rate increase will be delayed until at least 2016 climbed to the highest this year. Traders’ bets that the Fed will lift its benchmark by year-end have dropped to less than a 30 percent chance. For March, the probability has tumbled to about 49 percent, from 66 percent at the start of the month.

Fed Governors

Fed Governor Daniel Tarullo told CNBC Tuesday that he doesn’t currently favor raising rates in 2015. That lines him up with fellow Governor Lael Brainard, who made the case on Monday for patience, and diverges from the majority of Federal Open Market Committee members including Chair Janet Yellen.

Sumitomo Mitsui Construction gained 24 percent, its biggest jump since April 2013. The stock tumbled 31 percent on Wednesday, the most since 1997, after the Nikkei newspaper reported that the company failed to check part of the foundation before building the apartment, and the construction was based partly on falsified data.

Asahi Kasei dropped 14 percent, the most since 1999, to lead declines on the Nikkei 225. The chemicals maker, which also operates a construction division, said its unit that did subcontracting work for Sumitomo Mitsui Construction didn’t properly install foundation piles at an apartment building in Yokohama that has tilted. The subsidiary will bear all the costs of investigating and repairing the damage, Asahi Kasei said.

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