Japan Oil Stocks Lead Topix Higher as OPEC Moves to Cut Output

  • Topix on course for best quarterly performance this year
  • Oil explorer Inpex posts biggest daily gain since Aug. 17

OPEC Seals a Deal: Where Do Markets Go From Here?

Japanese shares rose, led by energy companies, after OPEC agreed to cut oil production for the first time in eight years, while the weaker yen boosted exporters.

The Topix index closed 0.9 percent higher in Tokyo. The measure is on course for a 7.8 percent gain this quarter, its first such increase this year. Crude futures jumped more than 5 percent in New York after OPEC said it plans to limit daily output to 32.5 million to 33 million barrels, wrong-footing traders who had expected a continuation of the pump-at-will policy adopted in 2014. The agreement is a relief for Japan’s explorers and producers, as well as trading companies invested in energy, whose shares have tumbled amid the oil rout in the last two years.

SecurityPercent ChangePrice
Topix+0.9%1,343.25
Nikkei 225+1.4%16,693.71
Yen-Dollar-1.0%101.67

“OPEC’s decision to curtail production wasn’t expected, and now crude prices will likely head toward a range of $50 to $60 per barrel from $40 to $50 per barrel, which will ease global deflationary concerns,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo.

The yen slid to a one-week low against the dollar and weakened against all of its 31 major peers, as the OPEC decision fueled demand for higher-yielding assets. Crude’s ascent stoked speculation that it would help the central bank Governor Haruhiko Kuroda to achieve his inflation goals. A gauge tracking electric-appliance makers and autos rose 1.5 percent and 0.8 percent, respectively.

The rebound in Japanese equities on Thursday comes after banks tumbled this week on concerns over Deutsche Bank AG’s financial health, which sparked a global selloff in financial stocks. The Topix is down 13 percent in 2016 as the yen’s 18 percent advance against the dollar this year hurt the outlook for exporter shares.

More than two stocks rose for each one that fell on the 1,966-member Topix. Japan Petroleum Exploration Co. added 8.8 percent. Inpex Corp., the country’s largest oil-and-gas explorer, jumped 5.7 percent for its biggest gain since Aug. 17. The company had slumped 28 percent this year through Wednesday, after prolonged weakness in crude prices triggered writedowns. With a number of atomic plants still shuttered following the 2011 nuclear disaster, Japan’s reliance on imported energy has been rising.

The Topix Wholesale Trade Index, which tracks Japan’s biggest trading houses, is expected to be another beneficiary of stronger oil prices. The industry group added 1.9 percent and was among the biggest contributors to the broader measure’s advance today. Mitsubishi Corp., which handles everything from consumer products to fuels, metals and chemicals, gained 3.7 percent.

“Japan’s energy business isn’t that big, but it’s a good reason to go risk-on for stock investors,” said Yoshinori Shigemi, a global market strategist in Tokyo at JPMorgan Asset Management Ltd. “We’ll have to see if OPEC follows through on its latest agreement.”

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