Exporters Boost Japanese Shares as Yen Weakens on Fed Rate Bets

Japanese stocks rose, boosted by exporters, as the yen headed for its longest losing streak against the dollar since August after U.S. factory data that beat estimates added to expectations for a Federal Reserve rate hike.

The Topix index rose for a second day, extending this week’s gain to 1.3 percent. The yen fell for a sixth day, weakening 0.6 percent to 102.26, after a report showed American manufacturing expanded in September, fueling confidence in a recovery that is key to determining the Fed’s rate path. The rally in the Topix follows a 2 percent decline last week as concern over Deutsche Bank AG’s financial troubles weighed on global stock markets.

SecurityPercent ChangePrice
Nikkei 225+0.8%16,735.65

“Overall, the U.S. economy appears to be on a growth track,” said Mitsuo Shimizu, a deputy general manager at Japan Asia Securities Group Ltd. in Tokyo. “As some had been expecting a deterioration in the manufacturing figures, alleviation of such worries will help Japanese shares rise.”

More than three stocks rose for each that fell on the Topix, with electric-appliance producers and automakers providing the biggest boost among the 33 industry groups. A gauge tracking carmakers advanced 1.4 percent with Toyota Motor Corp. climbing 1.9 percent. Bank shares also lifted the market, rising 1.6 percent after slumping 7.5 percent last week, as concern over Deutsche Bank’s financial troubles eased.

  • Drugmakers including Takara Bio Inc., Cosmo Bio Co. and Medical & Biological Labs Co. rallied after Japanese biologist Yoshinori Ohsumi won the Nobel Prize in medicine for discoveries of mechanisms for autophagy, the process by which cells degrade and repair themselves.
  • Olympus Corp. was one of the best performers on the Nikkei 225, climbing 3.9 percent, after the camera maker said it will sell subsidiary Nippon Outsourcing Corp. to Longreach Group Ltd.
  • Zojirushi Corp., which makes kitchen appliances, tumbled 6.6 percent after it trimmed its full-year profit forecast by 6.7 percent. 
  • Hitachi Ltd. gained 1.6 percent. The company is considering a sale of its controlling stake in Hitachi Kokusai Electric Inc., according to people familiar with the matter. Hitachi Kokusai has a market value of about $1.8 billion.

Futures on the S&P 500 Index climbed 0.1 percent after the underlying equity gauge fell 0.3 percent on Monday. The latest data showed the Institute for Supply Management’s index rose to 51.5 from August’s 49.4 reading that marked the first contraction in six months. A level above 50 signals growth.

Traders boosted the odds of a rate increase by December to 61 percent on Monday, up from a 51 percent a week earlier, after the Fed stood pat on raising rates at its September policy meeting. Eyes are on U.S. payrolls data due later this week, which is expected to provide more clues on how the Fed will pace its rate rises.

“Solid data shows that the U.S. economy is prepared enough to withstand potential rate hikes, which is good for stocks” said Yoshihiro Okumura, general manager at Chibagin Asset Management Co. “The market appears ready to take a more rational approach in reading into the Deutsche Bank issue as well.”

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