Japanese Stocks Rise as Weaker Yen Boosts Exporters, Oil Gains

  • Energy shares advance in Tokyo as crude jumps past $48
  • Volume 20 percent below 30-day average as investors await data

Japanese stocks rose as a weaker yen aided exporters, while oil’s rally to a six-month high boosted energy shares.

The Topix index added 1.1 percent to 1,335.85 at the close in Tokyo, led by shippers. The Nikkei 225 Stock Average gained 1.1 percent to 16,652.80. The yen weakened for a second day to 109.20 per dollar, not far from its weakest level in May. Oil rallied as Goldman Sachs Group Inc. said the global glut is easing amid supply disruptions and higher demand.

“The main drivers of stability are oil and the weaker yen,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo. “During the Golden Week holidays it looked like the yen might keep surging to as much as 100 per dollar, but now that it’s back to 109, there’s a sense of relief.”

Exporters were mostly higher as the yen stabilized, with heavy-machinery maker Komatsu Ltd. rising 3.2 percent. Kikkoman Corp., a soy-sauce maker that gets about 40 percent of revenue from North America, added 1.6 percent.

Crude oil futures extended gains, jumping through $48 per barrel. A decline in production driven by unexpected supply disruptions, as well as sustained demand, have resulted in a “sudden halt” to the output surplus, Goldman analysts wrote in a report dated May 15.

Energy, Apple

Energy shares were among the biggest winners in Tokyo trading. Inpex Corp., Japan’s largest oil and gas explorer, rose 3.2 percent, while JGC Corp., which provides services to oil firms, also climbed 3.2 percent.

Futures on the S&P 500 rose 0.1 percent, after the underlying gauge rallied 1 percent on Monday. Apple Inc., which had dropped 14 percent this year through Friday on waning smartphone demand, jumped 3.7 percent to post the steepest climb since March 1 after Warren Buffett’s Berkshire Hathaway Inc. disclosed a $1.1 billion stake in the iPhone maker.

Buffett’s bid provided a boost to Japanese companies that supply smartphone parts. Taiyo Yuden Co. climbed 4 percent, while Nissha Printing Co., which supplied iPad screens, rallied 8.8 percent. Japan Display Inc. gained 2.5 percent.

Mobile carriers plunged after Bloomberg reported the government may step up pressure for them to offer cheaper plans. Surging profits show they have room to reduce costs for customers, an official at the communications ministry told Bloomberg. KDDI Corp. sank 3.5 percent, reversing a gain of 1.3 percent, while NTT Docomo Inc. dropped 2.8 percent.

Mitsubishi UFJ Financial Group Inc. rose 1.3 percent as a plan to buy back as much as 1.67 percent of its own shares outweighed a profit forecast that missed analyst estimates. Japan’s largest bank said net income in the year ending March 2017 would be impacted by 100 billion yen as a result of negative interest rates.

Low Volume

Volume on the Topix was 20 percent below the 30-day average, indicating some investors are reluctant to jump back in a market that is still down 14 percent this year.

“Investors still want more positive factors to buy aggressively. They want to wait and see the gross domestic product announcement and the Federal Reserve minutes released tomorrow,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo.

Japan will release preliminary data on its first quarter GDP on Wednesday prior to the market open, with economists expecting a 0.3 percent annualized expansion, sidestepping a recession. In the U.S., the Fed will release minutes from its last meeting on monetary policy on Wednesday.

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