Topix Posts First Back-to-Back Weekly Gain in 2016 on Oil, Yen

  • Sharp falls another 11 percent after Foxconn deal in doubt
  • Insurers close week as best performers among Topix groups

Japanese stocks rose, posting their first back-to-back weekly gain since November, as the yen and crude steadied while finance ministers gathered for a Group of 20 meeting.

The Topix index climbed 0.3 percent to 1,311.27 at the close in Tokyo to finish the week 1.5 percent higher. The yen was little changed on the week, trading at 112.63 per dollar. Higher oil prices and strong data on U.S. capital goods triggered a rally for U.S. equities, while shares in Shanghai rose on Friday after a 6.4 percent plunge the previous day.

“The biggest reasons for the gradual return of the risk-on trade are stability in oil prices and better U.S. economic indicators,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. in Tokyo. “At least for now we’re seeing firmness in Chinese shares, and as long as that continues it won’t become a negative catalyst."

E-mini futures on the S&P 500 Index were little changed after the underlying equity gauge closed 1.1 percent higher on Thursday, jumping in afternoon trading as banks resumed their rebound from a selloff to start the year. Data showed January’s durable goods orders rose the most since March, boosting the greenback against the yen and easing concerns since the end of last year that factories were in full retreat.

“U.S. manufacturing has been a worry for investors, so a recovery there is a positive catalyst,” said Masayuki Doshida, a senior market analyst at Rakuten Economic Research Institute.

Eyes on Shanghai

The Shanghai Composite rose 1.2 percent on Friday. Investors sifted through remarks from policy makers gathered in Shanghai for the G-20 talks, with China’s central bank head saying that policy makers still have room to act on the monetary front. Germany’s finance minister doused expectations, saying he opposed any fiscal stimulus plan from the G-20 and instead sought to focus on structural reforms to strengthen national growth rates.

The positive trend “shouldn’t end even if we see nothing concrete come out at the G-20 and we see a temporary correction,” said Daiwa’s Monji.

Sharp Corp. tumbled 11 percent after a deal with Foxconn Technology Group appeared at risk just hours after the Taiwanese firm won a vote to take control of the Japanese electronics maker. Foxconn said it won’t finalize a deal until the situation involving “new material information” is resolved. Friday’s drop added to Thursday’s 14 percent loss, which came after the initial announcement of the deal.

Sharp’s biggest competitor Japan Display Inc. surged 7.9 percent, reversing Thursday’s 1.4 percent loss.

Eighteenth Bank Ltd. soared 11 percent after agreeing to merge with Fukuoka Financial Group Inc. Final terms of the deal are expected to be agreed by August. Shares of Fukuoka Financial lost 2 percent.

Goldman Ratings

Insurers, this week’s biggest winners in the Topix, extended gains despite a Goldman Sachs Group Inc. downgrade of several firms. Dai-ichi Life Insurance Co. rose 2.7 percent.

The New York brokerage also upgraded Hitachi Capital Corp., sending shares 7.1 percent higher. Goldman cited higher returns from overseas operations at the lender.

DeNA Co. fell after Morgan Stanley Mitsubishi UFJ Securities Co. lowered its price target on the gamemaker, saying details of future products from their tie-up with Nintendo Co. remain “murky.” Shares of DeNA lost 6.5 percent, while Nintendo slipped 1.6 percent.

Japan’s consumer prices excluding fresh food showed no gain in January after rising 0.1 percent in the previous two months, according to a report Friday by the statistics bureau in Tokyo. Stripping out energy and food, the gauge rose 0.7 percent.

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