Nikkei 225 Closes Above 20,000 as Jump in Capex Buoys Sentiment

  • Capital spending rose more than estimated in third quarter
  • All but one of Topix's 33 industry groups advance in Tokyo

Japanese shares rose for the first time in three days, with the Nikkei 225 Stock Average closing above 20,000 for the first time since August, after data showed capital spending jumped more than expected as company profits increased in the third quarter.

The Nikkei 225 added 1.3 percent to 20,012.40, its highest close since Aug. 20. The broader Topix index gained 1.4 percent to 1,601.95, as all but one of the gauge’s 33 industry groups advanced. The yen added 0.1 percent to 122.98 per dollar after weakening for two days.

“Japan’s capex numbers were exceptionally good,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees about 3.7 trillion yen ($30 billion). “It’s giving investors peace of mind. Japan’s economy isn’t as bad as people thought.”

Government data showed capital spending jumped 11.2 percent in the third quarter from a year earlier, more than economist forecasts for 2.2 percent growth. The gain raises the possibility of an upward revision to gross domestic product after news last month that Japan had slipped into a recession. Company profits increased 9 percent after jumping almost 24 percent in the previous three months.

Software and controller maker Yokogawa Electric Corp. rose 5 percent to lead gains on the Nikkei 225. Kajima Corp. added 3.9 percent after JPMorgan Chase & Co. raised its rating on the building contractor’s stock to overweight. Nissan Motor Co. slumped 1.9 percent after a Nikkei newspaper report it plans to increase its stake in French carmaker Renault SA to 25 percent or more.

The Topix on Monday capped a second straight monthly gain. Japanese stocks have weathered a cooling Chinese economy and the prospect of monetary tightening by the Federal Reserve to rank among the best performers in developed countries this year. The Topix rallied 14 percent in 2015 through Tuesday.

E-mini futures on the Standard & Poor’s 500 Index added 0.6 percent after the underlying gauge lost 0.5 percent on Monday as investors prepared for policy decisions from central banks.

Traders see a 74 percent chance the Fed will raise U.S. interest rates in December. By contrast, economists surveyed by Bloomberg unanimously predict the European Central Bank will expand stimulus on Thursday.

“Markets are perhaps rallying on “expectation for stimulus and the fact everybody basically has no alternative besides equities,” said Mikio Kumada, a Hong Kong-based global strategist at LGT Capital Partners Ltd. “Especially Japan, which is the only market in the world where you actually had continuous increase in earnings per share while everyone else was hurt by the oil industry. So Japanese equities make a lot of sense today. And if I had an excuse to buy, I’d buy today.”

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