Japanese Stocks Climb as Yen Pressure Eases Amid Stimulus Bets

  • Construction firms gain on report Japan may boost extra budget
  • Investors await the start of the G-20 meeting in Shanghai

Japanese stocks rose as stability in the yen eased investor nerves, while signs that politicians may soon provide more fiscal support boosted sentiment ahead of the Group of 20 meeting on Friday.

The Topix jumped 1.8 percent to 1,307.54 at the close in Tokyo, erasing losses from the previous two days. The Nikkei 225 Stock Average added 1.4 percent to 16,140.34. The yen trading at 112.16 per dollar, pulling back from Wednesday’s intraday highs. Investors cheered signs that Japan may increase an extra budget, while China’s vice finance minister said fiscal stimulus should be deployed to boost global growth.

“Globally, policymakers’ mindset is moving from monetary to fiscal, so Japan’s move to create an extra budget is commendable,” said Nobuhiko Kuramochi, head of investment information at Mizuho Securities Co.

Fiscal Spending

TV Asahi reported the government was considering expanding a spending package ahead of the summer elections. The extra budget would amount to 5 trillion yen ($45 billion), it reported, citing several unidentified ruling party officials. Separately, the chairman of Japan’s ruling party’s general council the government may take "aggressive" steps including fiscal spending, the Nikkei reported late Wednesday.

Kuramochi said the news was a boost to real-estate and construction stocks, which led gains among the Topix’s 33 industry groups. Builder Obayashi Corp. jumped 5.8 percent, also aided by a brokerage upgrade. Developer Mitsubishi Estate Co. climbed 2.4 percent.

Ahead of the G-20 meeting, Japan may be playing its fiscal card to shift focus away from the Bank of Japan’s controversial policy of easing the yen, according to Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank. She warned that even though negative interest rates have made it profitable for Japan to borrow money, the government must continue practicing fiscal discipline.

The G-20 meeting begins on Friday in Shanghai. How policy makers should respond to a weakening global outlook will dominate the agenda, people familiar with the talks have said. That echoed today’s comments by China’s Vice Finance to boost fiscal spending. U.S. Treasury Secretary Jacob J. Lew said finance ministers wouldn’t deliver an “emergency response” to the market turmoil.

Sharp Buyout

Sharp Corp. plunged 14 percent after striking a deal for Foxconn Technology Group to take control of the Japanese electronics firm. The agreed price was 118 yen per share, 32 percent below Wednesday’s closing price.

Iron and steel producers gained, with Daido Steel Co. climbing 4.6 percent. Insurance companies also rose, with Tokio Marine Holdings Inc. jumping 4 percent.

Aeon Co. advanced 3.3 percent after the Nikkei reported the company will reduce operating hours at its supermarkets. Suzuki Motor Corp. jumped 3.4 percent after Bank of America Corp. raised its rating on the automaker.

E-mini futures on the S&P 500 Index slipped 0.4 percent after the underlying equity gauge closed 0.4 percent higher on Wednesday, led by a rebound in raw-materials companies, energy producers and technology stocks. Earlier in the day, Markit Economics reported the worst preliminary reading on U.S. service-sector activity since 2013, raising questions about growth in the biggest part of the U.S. economy which has been seen as more resilient than the manufacturing sector.

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