Japanese Stocks Advance as Investors Await Fed, Weigh Earnings

  • Fed expected to keeps rates on hold ahead of BOJ meeting
  • Japan retail sales unexpectedly dropped in September

Japanese stocks rose amid low volume as investors awaited the Federal Reserve’s decision on monetary policy and sifted through mixed earning reports.

Mazda Motor Corp. added 3.1 percent after half-year net income topped its forecast. SoftBank Group Corp. jumped 2.7 percent after its biggest investment, Alibaba Group Holding Ltd., beat quarterly sales expectations, sending its shares to the highest close in New York in two months. Panasonic Corp. slumped 1.9 percent after the Nikkei newspaper reported rival LG Chem Ltd. was in talks to supply batteries to Panasonic customer Tesla Motors Inc. Canon Inc. fell 3.2 percent after quarterly profit missed estimates on a slowdown in China.

The Topix index closed 0.3 percent higher at 1,547.19 in Tokyo, having swung between gains of 0.5 percent and losses of 0.2 percent. Turnover was 18 percent below the 30-day average. The Nikkei 225 Stock Average added 0.7 percent to 18,903.02. The yen traded at 120.40 per dollar after strengthening 0.5 percent on Tuesday, the most in two weeks. The Fed is expected to stand pat Wednesday on monetary policy while keeping options alive for its next meeting in December. The Bank of Japan also meets this week.

“We’re still in a state of waiting for the Federal Reserve," said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “We’ve seen a lot of earnings from the U.S. and Japan, and economic data coming out of the U.S., but they aren’t giving a definitive direction for the financial markets."

Fed Clues

With futures markets pricing in just a 4 percent possibility of an interest-rate increase at Wednesday’s meeting, investors will instead parse the Fed’s statement for clues on whether economic growth in the U.S. and abroad is strong enough to warrant a rate hike at the next meeting on Dec. 15-16. A report on Tuesday showed orders for business equipment in the U.S. unexpectedly declined in September.

Decisions from the Fed on Wednesday and the BOJ on Friday come after China cut its lending rate last week and European officials signaled a willingness to add stimulus to combat flagging growth. Sixteen of 36 analysts surveyed by Bloomberg forecast the BOJ will ease policy.

Japan Earnings

Friday also marks the busiest day of the Japanese earnings season, with more than 300 companies expected to file results. Companies reporting Wednesday after the market closes include Hitachi Ltd. and Komatsu Ltd.

Mazda advanced 3.1 percent after first-half net income beat its forecast by 47 percent on stronger sales of its Skyactiv automobiles, cost improvements and favorable currency exchange rates.

SoftBank Group rose 2.7 percent after online retailer Alibaba defied the economic slowdown in China to post a 32 percent increase in sales. SoftBank’s stake in Alibaba is valued at 7.6 trillion yen ($63 billion), according to the Japanese carrier’s website.

Panasonic slumped 1.9 percent after the Nikkei reported Seoul-based rival LG Chemical is in talks to supply batteries for Tesla’s electric automobiles. Tesla accounted for about 1 percent of Panasonic’s revenue last year, according to Bloomberg data.

Canon fell the most in more than two months, losing 3.2 percent, after the camera-maker’s third-quarter results missed targets, forcing it to cut its full-year net-income forecast by 8.2 percent. The company said it can’t expect a speedy economic recovery in China.

A Japanese government report showed retail sales unexpectedly fell 0.2 percent in September from a year earlier. Economists surveyed by Bloomberg News had forecast a 0.4 percent gain.

E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent after the underlying gauge fell 0.3 percent on Tuesday as poor earnings from Ford Motor Co. to United Parcel Service Inc. weighed on shares. Apple Inc. advanced following its earnings report after market closed, as quarterly profit and sales exceeded analyst estimates.

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