Japan Stocks Join Global Rally Sparked by ECB Stimulus Comments

Updated on
  • Draghi says central bank will examine stimulus in December
  • U.S., European markets jump to close at two-month highs

Japanese stocks rose, following a global equity rally sparked by the European Central Bank’s signal that it’s ready to add to monetary stimulus this year. Foodmakers, brokers, property developers led gains.

All 33 Topix index industry groups gained. Nomura Holdings Co., Japan’s biggest brokerage, surged 3.7 percent. Cosmetics company Kose Corp. added 4.3 percent after reporting preliminary profit that beat its forecast. Fiber maker Kuraray Co. lost 4.1 percent, one of only 12 stocks to sink on the Nikkei 225 Stock Average, after Jefferies Group LLC cut its rating on the stock.

The Topix index added 2 percent to 1,547.84 in Tokyo, closing at the highest level in August and capping a weekly gain of 2.8 percent. The Nikkei 225 advanced 2.1 percent to 18,825.30 and the yen traded at 120.61 per dollar after weakening for six days. The ECB became the latest central bank to signal it may loosen policy if slowing growth and tepid inflation continue. Weak trade data earlier this week sparked speculation the Bank of Japan also will boost stimulus.

“Mario Draghi and his elves at the ECB practically confirmed there will be an early Christmas present,” Evan Lucas, a market strategist in Melbourne at IG Ltd., said in an e-mail to clients. “In short, all options are on the table for the ECB, also meaning the Bank of Japan and the Fed are now live events as well.“

Global Rally

The Standard & Poor’s 500 Index jumped 1.7 percent on in New York on Thursday and the Stoxx Europe 600 Index surged 2 percent. Both measures and the MSCI All-Country World Index of developed and emerging-market shares closed at two-month highs after ECB President Mario Draghi said policy makers will re-examine the degree of stimulus in December, adding that the quantitative-easing program will continue until beyond September 2016 if needed.

The Federal Reserve is scrutinizing economic data ahead of its policy meeting next week. A housing report on Thursday provided the latest sign that the recovery in U.S. residential real estate will support growth. Data also showed jobless claims last week hovered near the lowest level in four decades.

October Gains

Stocks around the world have rallied in October 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 9.7 percent in October, putting it on course for its biggest monthly gain since April 2013.

“Japanese shares are following this global rally,” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd. “If Europe is going to increase easing, then Japan will follow.”

Real-estate companies were among the biggest gainers on the Topix, with Mitsubishi Estate Co., the country’s biggest developer, adding 3.3 percent. Brokerages also jumped, with Nomura rising 3.7 percent, while Daiwa Securities Group Inc. climbed 2.3 percent.

Kose gained 4.1 percent. Preliminary net income for the six months ended Sept. 30 rose to 10.9 billion yen, beating its forecast for 7.7 billion yen, the company said.

Kuraray sank 4.1 percent, the biggest drop on the Nikkei 225. Jefferies reduced its rating on the stock to underperform from hold while also lowering its share price target by 25 percent.