Japan Stocks Pare Weekly Loss as Weakening Yen Boosts Exporters

  • Fast Retailing slumps most since 2011 on profit outlook
  • Seven & i surges as investors cheer departure of CEO

How Much Rally Is Left in the Yen?

Japanese stocks rose, paring a second weekly loss, as the yen weakened and exporters rallied. Fast Retailing Co. slumped the most since 2011 after cutting its profit outlook while Seven & i Holdings Co. jumped as investors cheered confirmation that its embattled elderly boss will step down.

The Topix index added 1.2 percent to close at 1,287.69 in Tokyo, paring this week’s drop to 1.1 percent. The Nikkei 225 Stock Average climbed 0.5 percent to 15,821.52. Both measures reversed early losses as the yen weakened 0.5 percent to 108.71 per dollar after surging 1.4 percent on Thursday. Investors are increasingly focusing on the 105 per dollar level as a point where authorities may step in.

“Investors are going to be trading stocks based on how the yen moves for a while longer,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. “The currency showing signs of weakness today has prompted repurchases in shares.”

The yen fell on Friday after Japanese Finance Minister Taro Aso said rapid currency movements are undesirable and action will be taken as needed. Chief Cabinet Secretary Yoshihide Suga and Bank of Japan Governor Haruhiko Kuroda said this week that they are watching currency markets and will act as necessary.

Intervention Level

Bank of America Merrill Lynch strategist Shusuke Yamada, who predicts the yen could climb another 8 percent this year, says 105 is the level at which policy makers would consider stepping in to sell. The yen jumped as high as 107.67 on Thursday, the strongest since before the central bank expanded monetary stimulus in October 2014, despite repeated efforts by officials to talk it down.

All but one of the Topix’s 33 industry groups rose. Toyota Motor Corp. rallied 0.8 percent, reversing earlier losses of as much as 3 percent, as the weakening yen boosted the outlook for export earnings. Honda Motor Co., which gets about 87 percent of its revenue from outside Japan, added 1.1 percent, erasing a 2.9 percent drop.

Uniqlo brand operator Fast Retailing blamed the stronger yen for a second straight cut to its annual profit forecast. Shares sank 13 percent after the firm also reported operating profit that was half of analysts estimates. It is the heaviest-weighted company on the Nikkei 225.

Resignation Boost

Seven & i rose 3.7 percent, brushing off its quarterly earnings miss, after Chief Executive Officer Toshifumi Suzuki, 83, said he’ll step down after the convenience store operator’s board rejected a plan to remove Seven-Eleven Japan President Ryuichi Isaka. The resignation was a win for billionaire activist investor Dan Loeb, who accused the CEO of passing over a successful executive as a potential successor to make way for his own son.

Yahoo Japan Corp. jumped 6.4 percent on a Bloomberg News report that Verizon Communications Inc. is planning to make a first-round bid for Yahoo Inc.’s Web business next week and that the deal will include its stake in Yahoo Japan, according to people familiar with the matter. Yahoo is the second-biggest shareholder of Yahoo Japan and a deal would potentially end speculation about its stake.

Futures on the Standard & Poor’s 500 Index added 0.4 percent after the underlying gauge dropped 1.2 percent on Thursday. A measure of banks fell the most since February, pacing losses amid declining bond yields as investors sought havens.

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