Japanese Stocks Rise on Reports Abe Will Delay Hike to Sales Tax

  • Energy explorers and insurers lead gains on Topix index
  • Group of Seven summit in central Japan concludes on Friday

HSBC's Major: Japan Needs to Loosen Fiscal Policy

Japanese stocks rose, led by energy explorers and insurers, after reports that Prime Minister Shinzo Abe has decided to delay a sales-tax increase.

Oil explorer Inpex Corp. added 3.6 percent at the close, while insurer Tokio Marine Holdings advanced 1.3 percent. Toshiba Corp. jumped 11 percent, the most in five years, after JP Morgan raised its rating on the electronics maker to overweight from underweight.

The Topix index added 0.5 percent to 1,349.93 at the close in Tokyo, capping a 0.5 percent weekly gain, as about five shares advanced for every four that fell. The Nikkei 225 Stock Average climbed 0.4 percent to 16,834.84. Trading volume was 16 percent below the 30-day average, after it hit the lowest this year on Tuesday. The yen traded at 109.69 per dollar after strengthening 0.4 percent on Thursday. A Group of Seven leaders’ summit at Ise-Shima in central Japan concludes on Friday.

“Given the series of reports we’ve had, the sales-tax hike is almost certainly going to be pushed back,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center in Tokyo. “Foreign investors who’d felt some uncertainty over policy could see this favorably.”

Takata Corp. declined 8.1 percent, after surging to its daily limit on Thursday following reports that the embattled airbag maker is in talks with KKR & Co. about a possible takeover. Gungho Online Entertainment Inc. surged 30 percent after the online game maker unveiled plans to roll out a Chinese version of the Puzzle & Dragons mobile game.

Sales Tax

Abe has decided to delay the sales-tax increase based on the global economic slowdown and the impact of last month’s Kumamoto earthquake, the Asahi newspaper reported, saying an announcement is possible on Wednesday. Kyodo newswire and the Nikkei newspaper also reported that a delay is likely to be announced. Abe said said Friday he will decide on the sales tax increase before the summer elections.

The Prime Minister failed in his bid to have Group of Seven leaders warn of the risk of a global economic crisis in a communique issued as their summit wraps up. The final statement declares that G-7 countries “have strengthened the resilience of our economies in order to avoid falling into another crisis.” Leaders had discussed a Japanese proposal to use stronger language. 

Japan’s core national consumer price index fell 0.3 percent against estimates of a 0.4 percent decline in April, according to data released Friday. The lack of price growth will intensify pressure on the Bank of Japan to consider further monetary stimulus after governor Haruhiko Kuroda disappointed the markets by taking no action at April’s meeting.

Yellen Speech

Futures on the S&P 500 Index were little changed. The underlying U.S. equity gauge closed little changed on Thursday, failing to surpass a key level as Brent crude erased gains after topping $50 a barrel for the first time in six months.

U.S. Federal Reserve Chair Janet Yellen will speak at Harvard University as part of Radcliffe day on Friday.

“There’s more focus on what Chair Yellen will say,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co. “It’s unlikely that the U.S. rate hike direction will be fully decided this weekend. We’ll probably continue to see a tug of war over this.”

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