Japanese Stocks Climb as Yen Retreats, Earnings Boost Sentiment

  • ANA gains as Nikkei predicts its operating profit to rise 10%
  • S&P 500 climbs to record, BHP reports strong China ore demand

Will Asian Stocks Extend Their Rally This Year?

Japanese shares rose for the first time in three days after the yen weakened as corporate results in the U.S. and higher commodities demand from China reignited investor optimism over economic growth.

The S&P 500 index climbed to an all-time high, as earnings at D.R. Horton Inc., the largest U.S. homebuilder, beat analysts’ estimates with buyer demand fueled by jobs growth, while raw-material producers rallied. BHP Billiton Ltd. reported increased iron ore output as prices soared on demand from China. The yen remained weaker against the dollar after dropping 1 percent Tuesday, while in Japan, ANA Holdings advanced after the Nikkei said the carrier’s operating profit will soar. U.S. President Donald Trump laid out incentives including tax cuts he’ll offer to top automakers to attract new plants in the U.S.

“I see earnings having a positive effect on the market this quarter,” said Takuya Takahashi, a Tokyo-based senior strategist at Daiwa Securities Co. “Though various concerns remain over the direction of Mr. Trump’s economic policies, in terms of the micro over the macro, corporate earnings in both the U.S. and Japan are a reason for relief in the market.”

Summary

  • Topix +1% to 1,521.58 at the close in Tokyo
  • Nikkei 225 +1.4% to 19,057.50
  • Yen +0.1% at 113.66 per dollar
  • All 33 Topix industry groups rose, led by metal makers; JFE Holdings +3.4%, Nippon Steel & Sumitomo Metal +2.3%, Hitachi Metals +2%
    • Gains by metal makers in Japan partly due to hopes Japanese firms will benefit from the Keystone XL and Dakota Access oil pipelines, after Trump took steps to advance their construction: Daiwa’s Takahashi
  • Exporters including carmakers and electric-appliance manufacturers were biggest boosts to the benchmark; Toyota Motor +1.9%, Alps Electric +6.5%
  • ANA Holdings +1.2% after Nikkei newspaper said the airline operator will post a 10% y/y increase in 9-month operating profit when it reports earnings on Friday
  • Nidec -1.2%; investing 100b yen to eliminate overtime by 2020, Nikkei says
    • co’s earnings weren’t far from expectations, and there was some profit-taking, according to Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo
  • Takata +18% to limit after co. said reports that assume it was moving toward a court-led rehabilitation were “regrettable” and causing confusion and it’s in ongoing discussions to decide on a direction that takes account of all stakeholders
  • NOTE: Japan snapped a 14-month run of falling exports in December, with shipments to China setting a record as global demand picks up

Other Japan market news:
Japan Post Said to Plan More CLO Investments in Market Boost (1)
Toyota Adding 400 Indiana Jobs in $600 Million Answer to Trump
Nippon Life Sees Volatile Ride for Yen Before Ending Year at 120
Japan Yields Rise Broadly After BOJ Skips Short-Term Buying

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