Japanese Stocks Rise as Yen Drops on Yellen, Energy Shares Rally

  • Yellen says U.S. economy firm, doesn’t mention hike timing
  • Crude’s Monday advance sends energy shares up, airlines down

Japanese stocks rose as energy shares rallied on higher oil prices and the yen weakened after Federal Reserve Chair Janet Yellen said the U.S. economy is on a firm footing and rate increases will be gradual.

Shares in Tokyo are moving in tandem with the yen, which fell for a second day after Yellen said the strength in the American economy outweighs the negatives, while omitting any reference to when the Fed may raise borrowing costs.

The Topix index added 0.6 percent to 1,340.77 at the close in Tokyo. The measure earlier fell as much as 0.2 percent as the yen briefly traded higher. The Nikkei 225 Stock Average climbed 0.6 percent to 16,675.45. The yen fell 0.1 percent to 107.65 a dollar after weakening by 1 percent on Monday. The Japanese currency had jumped last week after an American jobs report showed its worst reading since 2010.

“Spooked by Friday’s jobs report, the market became uncertain whether we’d have even one rate hike this year, but that kind of risk-off reaction was exaggerated,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. “The yen has corrected some of its strength and that will abate further selling of Japanese stocks.

Futures on the S&P 500 Index rose 0.1 percent. The underlying gauge rose 0.5 percent on Monday to close at the highest since Nov. 3 as anxiety over the strength of the U.S. economy eased following Yellen’s speech.

Yellen said she’s fairly sure the U.S. economy will improve enough to warrant another interest-rate increase, but didn’t specify when that would be. The omission curbed speculation of a July tightening after Friday’s employment data. Futures traders lowered the possibility of an increase by next month to 22 percent after her speech, from 27 percent on Friday.

Commodity Rally

Energy shares led gains in Tokyo after crude futures jumped 2.2 percent on Monday, with Inpex Corp., Japan’s largest oil and gas explorer, rising 4.4 percent. Airlines were the biggest losers among the Topix’s 33 industry groups as Japan Airlines Co. fell 2.4 percent on concern fuel costs will rise.

Diaper-maker Pigeon Corp. surged 14 percent after net income in the first quarter beat analyst estimates and the company affirmed its full-year operating-profit forecast. Strength in its Chinese business was a positive surprise, analysts at Credit Suisse Group AG wrote in a report.

Pioneer Corp. advanced 0.9 percent after the company’s president said in an interview with the Nikkei newspaper that the audio-equipment maker is considering paying a dividend for the first time in a decade. The payment could be several yen per share and would be for the fiscal year ending March 2018, according to the report.

Hotto Link Inc. jumped by 16 percent after announcing it will work with Tencent Holdings Ltd. to expand the Shenzhen-based company’s WeChat Pay service in Japan. Visitors from China accounted for about a quarter of all tourists to Japan last year.

Suzuki Motor Corp. fell 1.7 percent after the Nikkei reported the government plans to re-test some of its vehicles for fuel efficiency.

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