Japanese Shares Climb as Yen Halts Advance, Oil Explorers Rise

Maher: Yen Can Strengthen to 80 If Abenomics Fails

Japanese shares climbed as the yen halted its advance after briefly surpassing 100 per dollar, while oil explorers jumped after crude prices rose.

The Topix index added 1 percent to 1,311.13 at the close in Tokyo, after sliding 1.4 percent on Tuesday. The Nikkei 225 Stock Average increased 0.9 percent. The yen slipped 0.7 percent to 101 per dollar, paring a 0.9 percent advance on Tuesday, after Federal Reserve Bank of New York President William Dudley’s comments suggesting an interest rate increase is on the cards strengthened the dollar.

“In the short term, the sharp appreciation in the yen has been put to a halt and the sentiment is in favor of buying exporter shares,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “The market is correcting itself now after many were caught off-guard yesterday by the downturn in stocks.”

It was the second time this year that the Japanese currency surpassed 100 yen to the dollar, with foreign-exchange traders becoming increasingly confident that the Bank of Japan won’t stand in the way of further yen strength. Strategists at Bank of Tokyo-Mitsubishi UFJ Ltd. and Morgan Stanley see the currency extending this year’s almost 20 percent gain versus the dollar, further confounding policy makers who are seeking to spur growth and inflation in the world’s third-largest economy.

Japanese Vice Finance Minister Masatsugu Asakawa said he’s watching with concern to see if there are speculative moves in the foreign-exchange market after the currency touched 99.54 against the greenback on Tuesday, its strongest level since November 2013.

Futures on the S&P 500 Index added 0.1 percent as investors await the release of minutes from the Federal Reserve’s July meeting for clues on the likelihood of a U.S. interest rate increase this year. The underlying measure lost 0.6 percent on Tuesday.

It’s getting closer to the point when it will be appropriate to raise short-term rates, and an increase in September is possible, Dudley said in an interview with Fox Business Network. The odds of a rate hike this year grew to 51 percent, from less than even a week ago.

Topix trading volume was 13 percent below the 30-day average, with about the same number of shares falling as rising.

  • A gauge tracking oil explorers rose 5.9 percent to lead gains among the 33 Topix industry groups as crude traded above $46 a barrel. Inpex Corp., which has an 87 percent weighting on the measure, advanced 6.5 percent. 
  • Sumitomo Heavy Industries Ltd. added 8.2 percent for the biggest gain on the Nikkei 225 after broker Nomura Holdings Inc. raised its rating on the stock to buy.
  • The Topix Insurance Index added 4.3 percent, the second-most among the sectors, with T&D Holdings Inc. surging 7.8 percent while Sony Financial Holdings Inc. climbed 5.4 percent.

The BOJ’s almost doubling of its ETF purchases to 6 trillion yen a year is also helping support sentiment among investors, said Chihiro Ohta, a senior strategist with SMBC Nikko Securities Inc.

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