Japanese Stocks Advance After Aso Says Sales Tax Delay Likely

  • Data shows Japan’s industrial production climbed in April
  • Acucela plummets 41 percent after report of TSE investigation

Japanese stocks rose as a weakening yen spurred gains for exporters and the nation’s finance minister said the government would probably delay a planned sales tax hike.

The Topix index added 1 percent to 1,379.80 at the close in Tokyo, its highest level this month and capping a 2.9 percent increase in May. The Nikkei 225 Stock Average climbed 1 percent to 17,234.98. The yen reversed a gain of as much as 0.3 percent to decline 0.1 percent, following a 1.2 percent drop over the previous two days.

Finance Minister Taro Aso said on Tuesday that weakness in private consumption means that now isn’t the time to raise the sales tax, which is planned for April next year. His comments echo Hakubun Shimomura, an aide to Prime Minister Shinzo Abe, who said on Sunday that the levy needs to be delayed until late 2019 to sustain an economic recovery. Abe is also planning to propose a fiscal stimulus package of as much as 10 trillion yen ($90 billion), the Nikkei newspaper reported on Monday.

“A delay in increasing the sales tax is a form of medicine that can stop the economy worsening,” said Norimitsu Takeda, chief investment officer at Zurich Life Insurance Co. “There’s also talk of fiscal stimulus, and increasing expectations the economy will expand.”

Exporters rallied, with Toyota Motor Corp. rising 1.8 percent after earlier falling as much as 0.6 percent and Mazda Motor Corp. adding 2.7 percent. Automakers and electrical-appliance makers were among the biggest boosts to the Topix. Panasonic Corp. jumped 3.6 percent after the Nikkei newspaper reported the company will end production of liquid crystal display television panels.

For more on Aso’s comments about the sales tax increase, click here.

Takata Corp. climbed 3.4 percent. The scandal-hit airbag maker has ruled out bankruptcy as a way of mitigating its liabilities, a person with knowledge of the matter said. The company will instead seek buyers that could take a controlling stake and carry it through its crisis, according to the person, who asked not to be named because the discussions are private.

Regional banks rose in Tokyo after SMBC Nikko Securities Inc. lifted its rating on several lenders. Hokuhoku Financial Group Inc. jumped 3.8 percent, while Gunma Bank Ltd. added 3.5 percent.

Drugmaker Acucela Inc. plummeted 41 percent, bringing its losses for the past five trading days to 71 percent and erasing more than $1.6 billion in market value during the period. The Tokyo Stock Exchange is investigating why shares dropped sharply last week a day before the company released a negative statement about a drug trial, according to a person familiar with the situation.

Japan’s Economy

Japan’s industrial production climbed 0.3 percent in April from a month earlier, beating economist estimates for a 1.5 percent drop, figures on Tuesday showed. It fell 3.5 percent from a year ago. Separately, data showed the job-to-applicant ratio rose to 1.34 last month, the highest since 1991 and up from 1.3 in March. The nation’s jobless rate held steady at 3.2 percent, meeting economists’ estimates.

The Federal Reserve’s rate outlook continued to occupy investors, with traders putting odds of a hike in July at more than 50 percent. As U.S. officials emphasize that any policy tightening is dependent on the economy showing improvement, investors will be scrutinizing American payrolls and personal income data due this week. Futures on the S&P 500 Index added 0.1 percent from Friday’s session, with U.S. markets closed Monday for Memorial Day.

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