Financials Lead Japan Stock Gains on U.S. Deregulation Moves

  • Banks jump after Trump review of Dodd-Frank, MUFG earnings
  • Improvement in U.S. economy positive: Mitsubishi UFJ Kokusai

Japanese stocks advanced as bank shares boosted the benchmark gauge, after U.S. jobs data beat expectations and the Trump administration moved to roll back financial regulations.

Mitsubishi UFJ Financial Group, Inc. was the biggest boost to the Topix index overall after it reported a surprise 17% gain in third-quarter profit. The rally in bank shares also tracked U.S. counterparts after Labor Department data released Friday showed employers added 227,000 jobs to payrolls in January, above the 163,000 average pace projected by economists for 2017. Also on Friday, U.S. President Donald Trump took executive action to order a review of Dodd-Frank rules enacted after the 2008 financial crisis.

“With investors betting U.S. loans will become easier to get with looser financial regulations, it’ll be a boost for the economy assuming the loan demand is there,” said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management Co. “An improvement in the U.S. economy translates to a positive outlook for Japanese shares as well.”

Earnings season continues in Japan, with more than 100 companies on the Topix index reporting results Monday, including Toyota Motor Corp. Marubeni Corp. raised its full-year net income forecast, while Japan Tobacco Inc.’s full-year operating forecast fell below analyst estimates.

Summary

  • Topix +0.4% to 1,520.42 at the close in Tokyo
  • Nikkei 225 +0.3% to 18,976.71
  • Yen +0.04% to 112.56 per dollar
  • Mitsubishi UFJ Financial +3.4%, Sumitomo Mitsui Financial +1.6%
  • Honda Motor +2% after raising full-year operating profit forecast to 785b yen from 650b yen; Credit Suisse says dividend hike is positive
  • Itochu +3.1% after Nomura raises price target, profit forecast
  • Yahoo Japan +15% after quarterly earnings beat estimates on strong growth in advertising and online shopping from smartphones
  • UACJ -14% after Jefferies cuts rating citing risks including a failure of co.’s Thai plant
  • Kikkoman -5.6% after Morgan Stanley MUFG says operating profit for 3Q was below brokerage’s estimate on sluggish domestic sales growth

Other Japan market news:
Trump Angst Prompts Japanese Bank to Form Special Advisory Team
A Year On, Japan Banks Brave Negative Rates Thanks to Trump
BOJ Shows Resolve to Cap 10-Year Yields, BofA Merrill Lynch Says
Coal Powers Mitsubishi Toward Japan’s Top-Earning Trader: Chart

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