Japan Shares Rise for Ninth Day as Oil Rally Overshadows Quake

  • Topix extends longest winning streak since August 2015
  • Equities erase early loss tied to Fukushima earthquake concern

Are Global Stocks Overdue for a Correction?

Japanese stocks extended their winning streak to a ninth day as a rally in oil companies overshadowed concerns following a magnitude 7.4 earthquake off the coast of Fukushima.

The Topix index erased earlier declines of as much as 0.2 percent and continued its longest run of gains since August 2015. Japan issued its biggest tsunami warnings in five years after the earthquake struck at 5:59 a.m. local time Tuesday. The alerts affecting the same region hit by the March 2011 disaster were lifted before trading ended. The market will be shut on Wednesday for a holiday.

SecurityPercent ChangePrice
Topix+0.3%1,447.50
Nikkei 225+0.3%18,162.94
Yen-Dollar+0.02%110.80

“There’s a bit of a wait-and-see mode due to the earthquake, but U.S. shares were strong and oil prices rose, which calls for local equities to be bought,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo. “Investors will eye news on the earthquake, but as long as the damage isn’t extreme, there won’t be lasting impact on markets.”

Five people were reported injured, mostly in northeastern Japan, according to the Fire and Disaster Management Agency. The weather agency warned aftershocks of a similar size could occur over the next week, triggering further tsunamis, public broadcaster NHK reported. A similar-sized quake struck the region two days before the March 2011 disaster that killed about 18,000 people.

A cooling system for spent fuel at Tokyo Electric Power Co.’s Dai-Ni plant was briefly shut down in wake of the temblor, bringing back memories of 2011, but was restarted less than two hours later. Tepco shares ended down 1.4 percent after falling as much as 2.6 percent.

Oil explorers were the biggest gainers for a second day, buoyed by higher crude. Prices rose after Iran and Iraq signaled that a group of oil-producing countries would reach a supply-cut deal. Japan’s largest oil and gas explorer Inpex Corp. advanced 1.7 percent while Japan Petroleum Exploration Co. added 2.5 percent.

Defensive stocks ranging from telecommunication shares to food companies also rose as investors shifted their focus to sectors that have been receiving less attention amid a global stock market rally that bolstered U.S. equities to record highs. Nippon Telegraph & Telephone Corp. and dairy foods producer Meiji Holdings Co. each climbed 2.4 percent.

The Tokyo equity market is maintaining course after both the Nikkei 225 Stock Average and the broader Topix gauge entered bull markets, rising more than 20 percent from their lows of the year, bolstered by a weakening yen. A resurgent greenback and global uptick in bond yields triggered by Donald Trump’s surprise U.S. election win have boosted Japanese exporters and banks.

“The recent run up has been about pricing in expectations over incoming president Trump’s policy measures like public investments and tax cuts,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. “As long as there isn’t a huge disappointment relating to these, the odds are for the upward trend in stocks to be sustained.”

Exporters weighed on the broader stock market following a recent rally. The world’s biggest automaker Toyota Motor Corp. dropped 1.1 percent, while Mazda Motor Corp. shed 2.2 percent. Car manufacturers have been one of the biggest contributors to the Topix’s late rally, rising 6.4 percent last week amid a pullback in the local currency. Exporters of electric appliances fell 0.3 percent on Tuesday.

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