Japan Shares Rise in Thin Trading as Investors Await Earnings

  • Retailers, banks and fishery stocks climb while exporters drop
  • Nikkei 225 Volatility Index sinks to lowest since August

Japanese shares edged higher in light trading before earnings season begins in earnest, with companies benefiting from domestic demand advancing while carmakers and other exporters slid as the yen gained.

The benchmark Topix index rose less than 0.1 percent in Tokyo on volume 9.4 percent lower than the 30-day average, moving less than 0.5 percent for the fifth straight day. Volatility on the Nikkei 225 Stock Average sank to its lowest level in about two months. Retailers and banks provided the biggest boost to the Topix, while auto shares and electronics makers were the largest drags. More than 350 of the measure’s companies report results next week, with analysts projecting a 9.2 percent growth in earnings per share. The Topix is trading at about 14 times projected earnings, compared with its three-year average multiple of 14.5.

SecurityPercent ChangePrice
Nikkei 225+0.2%16,998.91

Japanese shares have been stuck in a range as investors weigh the likelihood of a Federal Reserve interest rate hike and its impact on the yen and exporters. Economic data from the U.S. has been mixed this week. While the cost of living rose at the fastest pace in five months in September -- a sign inflation is getting closer to the Fed’s target -- it trailed economists’ estimates. The yen gained 0.3 percent against the greenback on Wednesday, hurting the earnings outlook for exporters.

“U.S. economic data has been spotty and we’re also heading into Japanese earnings season, so long-term investors are standing on the sidelines while short-term trades take focus, leaving the market directionless,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. in Tokyo.

About 1.7 billion yen ($16 million) in shares changed hands on the Topix, 26 percent below the average for the past year. About two stocks rose for each that fell, with fishery stocks posting the biggest advance among the 33 industry groups and energy explorers leading declines.

  • Hitachi Ltd. dropped 1.9 percent. Goldman Sachs Group Inc. cut its stock rating on the electronics company to neutral from buy. 
  • Toyota Motor Corp., which gets almost 80 percent of its revenue overseas, slipped 0.6 percent.
  • Maruha Nichiro Corp. climbed 5.1 percent. The fisheries company’s operating profit for the three months ended September probably doubled after the stronger yen lowered its import costs, the Nikkei newspaper reported.
  • A measure of 188 retail stocks added 0.9 percent, while lenders advanced 0.3 percent.

In China, data showed gross domestic product rose 6.7 percent in the third quarter from a year earlier, matching economists’ estimates. The Topix climbed as much as 0.2 percent following the news before paring gains.

“The China GDP figures are in line with economists’ expectations, but some investors were concerned about the Chinese economy,” said Soichiro Monji, general manager of the economic research department at Daiwa SB Investments Ltd. “In that sense, the figures coming in line with the market’s consensus estimates could probably provide some relief.”

    Before it's here, it's on the Bloomberg Terminal.