Japanese Stocks Rise, Paring Gains as BOJ Keeps Policy Unchanged

  • All economists surveyed by Bloomberg expected no change by BOJ
  • U.S. shares jump after Fed signals December rate hike on cards

Japanese shares rose, paring gains as the yen strengthened and investors weighed the central bank’s decision to keep its unprecedented easing program unchanged. 

The Topix index added 0.9 percent to 1,600.38 at the close of trading in Tokyo after climbing as much as 1.5 percent. The yen rose 0.3 percent to 123.28 per dollar. U.S. stocks jumped Wednesday as the Federal Reserve published minutes of its October meeting, which stressed the pace of any rate increases will be gradual. Economists expected the Bank of Japan to maintain its stimulus at the conclusion of its policy meeting Thursday.

“Seeing as there was no event from the BOJ, investors are locking in profits,” said Tomoichiro Kubota, a senior analyst at Matsui Securities Co. “The rising yen is also impacting shares.”

Toyo Seikan Group Holdings Ltd. climbed 3.2 percent after Nomura Holdings Inc. raised its target price on the packaging maker’s stock. Pigeon Corp. jumped 3.3 percent after a report the baby product company’s operating profit for the nine months through October surged to a record. Maeda Corp. dropped 5.3 percent after Mitsubishi UFJ Morgan Stanley Securities Co. cut its rating on the building contractor, citing a weak recovery in earnings.

The Nikkei 225 Stock Average added 1.1 percent to 19,859.81 on Thursday as the gauge closed at its highest since Aug. 20.

Japan posted a trade surplus of 111.5 billion yen ($904 million) in October, against economist estimates for a 246.3 billion yen deficit. Exports for the month fell 2.1 percent on the year, worse than the 2 percent drop expected by economists, while imports fell 13.4 percent.

“Japan’s numbers are OK,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. “Imports were much lower, probably because of lower fuel costs, but exports remain weak. The main focus today will be the BOJ statement.”

All 41 economists surveyed by Bloomberg forecast the central bank wouldn’t expand its already unprecedented asset-buying program of increasing the monetary base an at annual pace of 80 trillion yen. The BOJ’s decision comes after a report earlier this week showed the economy slipped into a recession in the third quarter.

No Surprise

“We knew the BOJ wouldn’t do anything,” said Seiichiro Iwamoto, a senior fund manager at Mizuho Asset Management Co. in Tokyo. “Their policies are starting to have less and less of a positive effect on the real economy anyway. I don’t hold any hopes for them.”

E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent after the underlying gauge jumped 1.6 percent on Wednesday as the Fed signaled it thinks the economy is strengthening enough to merit a rate hike.

Fed officials inserted language into their October statement to stress that “it may well become appropriate” to raise borrowing costs in December and largely agreed that the pace of increases would be gradual, minutes of their meeting showed.

“Risk-on sentiment is returning," said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “The Nikkei 225 could easily go back to around 20,500. Still, the fundamentals haven’t changed all that much, we’re merely going back to the state we were in before the summer."

Toyo Seikan gained 3.2 percent to its highest close since 2007. Nomura boosted its share price target on the stock by 17 percent while maintaining its neutral rating. Nomura analyst Takashi Nishizu raised estimates for Toyo Seikan’s operating profit for the next fiscal year, citing the company’s efforts to cut fixed costs.

Pigeon, Maeda

Pigeon added 3.3 percent after the Nikkei newspaper reported the company’s operating profit probably rose 18 percent on the year to 11.5 billion yen, the highest ever for the February through October period.

Maeda sank 5.3 percent to its lowest close since June last year. Mitsubishi UFJ Morgan Stanley cut its rating on the stock to underweight, saying it has a negative impression of the company’s first-half earnings as many of its peers reported profit growth and raised their forecasts.

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