Japan Shares Rise, Yen Weakens as Investors Assess U.S. Debate

  • Hillary Clinton probably won, Haitong International says
  • Tokyo’s banks track global financial share rout on Deutsche

Japanese shares rose and the yen fell as investors assessed the impact of the first U.S. presidential debate between Hillary Clinton and Donald Trump.

The Topix rose for the first time in three days in Tokyo, erasing earlier declines of as much as 1.7 percent. Electric-appliance and auto makers swung to gains as the yen dropped. Banks and brokerages were the only sectors to fall, following a rout in Deutsche Bank AG shares. U.S. equity index futures reversed a drop to climb 0.6 percent as investors viewed the first of three debates before the Nov. 8 election as a victory for Clinton.

SecurityPercent ChangePrice
Topix+1%1,349.22
Nikkei 225+0.8%16,683.93
Yen-Dollar-0.5%100.86

“Markets were very anxious before the debate,” said Andrew Sullivan, managing director of sales trading at Haitong International Securities Group Ltd. in Hong Kong. “Today, there were no knock-out punches, but probably Hillary came out on top, and the market is slightly warmed. But there’s still two more to go.”

Clinton and Trump clashed sharply over trade and the U.S. economy in a rancorous start to a highly anticipated event that put on display their sharp differences over the nation’s fiscal future. On most policy issues they fell back on their standard campaign stances, offering no new proposals for how they would deal with the country’s challenges.

A CNN/ORC poll of debate watchers showed 62 percent thought Clinton won, compared to 27 percent for Trump. Before the debate, Trump and Clinton were tied at 46 percent in a head-to-head contest among likely voters, according to the latest Bloomberg Politics national poll.

“Who wins the debate is an important indicator, but ultimately it depends on who wins the election,” said Ken Peng, an Asian investment strategist at Citi Private Bank in Hong Kong. “We’re so close, also, in swing-state polling. It’s very difficult to make a call right now.”

The Topix’s outperformance versus the Nikkei 225 helped pushed the NT Ratio -- the Nikkei 225’s closing level divided by that of the Topix -- down for an eighth day, its longest such streak since April 2013. The Nikkei 225 has been lagging after the Bank of Japan said last week it would shift its exchange-traded fund purchases away from the measure and invest more in the Topix.

A Topix gauge tracking banks sank 1.3 percent, while a measure of brokerages lost 0.3 percent. The latest selloff comes on top of lingering concerns over the BOJ’s stance on negative interest rates that have hurt lenders’ profits. Oil explorers added 3.2 percent, the biggest gain on the Topix, after crude prices rallied 3.3 percent on Monday.

  • Electronic-component retailer Ryoden Corp. slumped 6.5 percent. The company slashed its operating-profit forecast for the half year ending Sept. 30 by 71 percent. 
  • Sumitomo Dainippon Pharma Co. jumped 4.9 percent. The drugmaker is in the final stage of clinical trials for a new type of cancer treatment in Japan and the U.S., the Nikkei newspaper reported.
  • Toshiba Corp. climbed 5.8 percent. The conglomerate’s NAND memory chip has the potential to be a profit driver following vigorous restructuring efforts in the wake of the company’s accounting scandal, said SMBC Nikko Securities Inc., which raised its rating on the stock to outperform.

Some 1,095 stocks on the Topix go ex-dividend on Wednesday, meaning Tuesday is the last day for investors to buy shares to receive the next payout. Japanese shares are being supported amid optimism passively managed funds, including those held by pension managers, will reinvest their dividend payments back into the market, said Seiji Arai, a strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. Traders also expect the BOJ to buy shares in the afternoon, he said.

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