Japanese Stocks Advance as Trade Figures Spur Easing Speculation

  • Japan's export growth slows, imports slump in September
  • Topix headed for biggest monthly gain since Apirl 2013

Japanese stocks rose for a second day, with the Topix index closing at the highest level in more than seven weeks, as speculation grew that the central bank will boost monetary easing after weaker-than-expected trade data.

Exporters such as Toyota Motor Corp., Sony Corp. and Honda Motor Co. gained as the yen weakened for a fifth day. Yaskawa Electric Corp. jumped 10 percent after the industrial-robot maker reported second-quarter profit that beat analyst estimates. Idemitsu Kosan Co. dropped 0.7 percent after the oil refiner unexpectedly reported a preliminary operating loss for the six months through September.

The Topix added 1.8 percent to 1,526.81 in Tokyo to close at its highest level since Aug. 31, with all of its 33 industry groups rising. The Nikkei 225 Stock Average gained 1.9 percent to 18,554.28. The yen fell 0.1 percent to 119.99 per dollar. Japan’s exports grew at the slowest pace in more than a year in September and imports slumped, data showed Wednesday. The trade report is one of the most crucial economic indicators before the Bank of Japan meets on Oct. 30 to consider whether the nation needs more monetary stimulus to stoke inflation and economic growth.

“Whenever we get negative economic news, hopes for additional monetary easing moves the market,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which manages the equivalent of about $33 billion. “We’re starting to see hard evidence for our fears about the global economy being weak.”

Japan's QE program has underpinned stock gains

Japan posted a 114.5 billion yen trade deficit in September, worse than economists estimates for an 87 billion yen surplus. Exports grew 0.6 percent from a year earlier, down from a 3.1 percent gain a month earlier, and imports slumped 11.1 percent. 

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index added 0.5 percent after the underlying gauge slipped 0.1 percent on Tuesday.

Stocks around the world have been rallying throughout October, restoring more than $4 trillion to the value of the global equity market, amid growing confidence the U.S. won’t raise interest rates this year. That came after last quarter’s volatility triggered by China’s surprise decision in August to devalue the yuan. The Topix index is up 8.2 percent in October, heading for its biggest monthly gain since April 2013.

Exporters Jump

Toyota, Honda and Sony were the three biggest individual contributors to the gain on the Topix. Toyota rose 2 percent. The stock maintained it gains even after the carmaker said it will recall 6.5 million vehicles worldwide for a melting power window switch.

Sony added 4.4 percent and Honda, which gets 87 percent of its sales abroad, rose 3.5 percent. Canon Inc. gained 2.8 percent.

Yaskawa Electric surged 10 percent to be the biggest gain on the Nikkei 225. Second-quarter operating profit was 9.83 billion yen, according to Bloomberg calculations. That compared with analyst estimates for 7.65 billion yen.

Idemitsu Kosan fell 0.7 percent after reporting an operating loss of 10 billion yen for the six months through September. The company had forecast a profit of 24 billion yen.

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