Japanese Stocks Follow U.S. Rebound as Jobs Report Buoys Dollar

  • Exporters lead gains on yen after U.S. payrolls beat estimates
  • Energy explorers fall after OPEC votes not to limit oil supply

Japanese stocks rallied after a strong U.S. jobs report reinforced confidence in the world’s largest economy and sent the dollar higher against the yen.

The Topix index climbed 0.7 percent to 1,585.21 at the close in Tokyo, after sliding 1.3 percent last week. Exporters from Honda Motor Co. to Kubota Corp. advanced, while energy explorers slipped after OPEC opted not to impose a limit on output. The Nikkei 225 Stock Average added 1 percent to 19,698.15. The yen traded at 123.30 per dollar after weakening 0.4 percent on Friday as U.S. non-farm payrolls increased more than economists had expected in November, driving U.S. equities higher.

“The biggest takeaway from these payroll figures is that the U.S. economy is strong enough to withstand higher interest rates. For Japanese companies, brisk activity in the American economy is naturally a plus,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “Stocks are in a good place right now as the pace of rate hiking is expected to be gradual and long-term interest rates aren’t expected to go up much.”

The 211,000 increase in November payrolls compared with economist projections of 200,000, and followed a 298,000 gain a month earlier that was bigger than previously estimated. The Standard & Poor’s 500 Index jumped the most in almost three months on Friday. Traders are pricing in a 74 percent chance of a Federal Reserve rate increase next week, while only five of the 73 economists surveyed by Bloomberg see rates left on hold at the Dec. 15-16 meeting.

Weaker Yen

The strengthening dollar was a boost to Japanese exporters. Honda rose 1.3 percent, while Kubota, which gets about two-thirds of machinery revenue abroad, rallied 1.9 percent.

Retailers gained after the Nikkei newspaper reported that operating profit at Muji brand-operator Ryohin Keikaku Co. rose to a record in the March-to-November period. Shares jumped 3.5 percent, while other retailers such as Aeon Co. and Fast Retailing Co. advanced at least 1.7 percent.

West Japan Railway Co. added 1.7 percent after Mizuho Financial Group Inc. raised its rating on shares of the railway operator. East Japan Railway Co. increased 1.8 percent.

Energy shares tumbled after OPEC members said pumping will remain at current levels despite a supply glut, sending prices of crude below $40 a barrel. Energy explorer Inpex Corp. fell 1.5 percent, while Japan Petroleum Exploration Co. dropped 1.6 percent.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying gauge jumped 2.1 percent on Friday, the most since Sept. 8.

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