Japanese Stocks Advance, Led by Inpex; Topix at August High

  • 54% of Topix members beat quarterly profit estimates
  • Inpex rises as oil producer maintains forecast above consensus

Japanese stocks rose, with the Topix index closing at the highest level in more than 11 weeks, as energy explorer Inpex Corp. triggered a rally in commodity producers, while paper makers declined.

The Topix climbed 0.4 percent to 1595.32 at the close in Tokyo as more than two stocks rose for each that fell. The gauge has rallied 16 percent from an eight-month low in September as the Bank of Japan maintained its unprecedented monetary easing and expectations for higher U.S. interest rates boosted the dollar and weakened the yen, lifting the earnings prospects for exporters. Inpex gets about half its sales abroad.

“I do think the rally in Japanese equities has further to run,” said Angus Nicholson, Melbourne-based market analyst at IG Ltd. “There is clearly the ongoing possibility for the Bank of Japan to step up its QE program. There’s been a noticeable weakening of the yen against the U.S. dollar. This has been a great benefit for Japanese exports.”

Monetary and fiscal stimulus under Prime Minister Shinzo Abe has boosted exporter profits and stocks as the yen weakened about 30 percent against the dollar since his election in December 2012. Some 54 percent of Topix firms that have reported quarterly results this earnings season topped projections, according to data compiled by Bloomberg on companies for which estimates were available.

54% of firms beat on bottom line, with 50/50 split on top line during current earnings season

The Nikkei 225 Stock Average added 0.1 percent to 19,691.39. Stocks in Tokyo maintained gains after data out of China, Japan’s biggest trading partner, showed growth slowed further in industrial production and investment in October, while retail sales rose more than economists forecast.

Inpex climbed 4.2 percent after maintaining its profit forecast above consensus following a drop in first-half earnings.

Daikyonishikawa Corp. surged 15 percent after the maker of plastic components used in automobiles raised its full-year operating profit projection. NOK Corp., which makes oil seals for cars, added 12 percent on high volume as profit climbed in the first half.

Sumitomo Metal Mining Co. and Mitsubishi Materials Corp. cut profit outlooks Tuesday, underscoring the challenges from waning Chinese demand.

Sumitomo Metal retreated 8.1 percent after cutting its operating profit forecast by 37 percent to 74 billion yen ($600 million) for the year to March 31. Mitsubishi Materials advanced 0.7 percent after a reduction in its forecast was less pronounced, down 2.4 percent to 83 billion yen, following a 6.3 percent increase in first-half operating profit to 36.2 billion yen.

Pioneer, Citizen

Pioneer Corp., which makes audio equipment, lost 8.6 percent as it reported a 38 percent slide in first-half operating income. Citizen Holdings Co. tumbled 5.4 percent after the watch and machine-tool maker maintained its full-year profit estimates.

Earnings releases are ramping up this week with the so-called megabanks all reporting on Friday. Combined net income at Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. fell 24 percent from a year earlier to 597 billion yen in the three months ended Sept. 30, according to calculations based on the average of five analyst estimates compiled by Bloomberg.

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