Japan Shares Rally, Led by Banks on Optimism for Global Growth

  • Mitsubishi UFJ, Sumitomo Mitsui among biggest boosts to Topix
  • Steepening U.S. yield curves positive for megabanks: Nomura

ABN Amro's Duret Remains Overweight Equities

Japanese stocks gained, following a rally in U.S. equities, on speculation major economies are strong enough to withstand higher interest rates.

Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., and Nomura Holdings Inc. were among the biggest boosts to the Topix. Federal Reserve Chair Janet Yellen sparked the rally in banks after she reiterated Tuesday that the central bank’s tightening is on track, boosting Treasury yields. Bank of England Governor Mark Carney suggested on Wednesday that the time is nearing for a rate increase. Nintendo Co., SoftBank Group Corp. and Sony Corp. climbed after the S&P 500 Index rebounded from the biggest selloff in six weeks.

Steepening U.S. yield curves “will be positive for insurers that invest in foreign bonds, and megabanks that make overseas loans,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo. “Even if the rise in interest rates adds to volatility, the increase in data communication will keep adding to U.S. technology companies’ earnings, which will in turn support Japanese technology firms that supply the hardware.”

Summary

  • Topix +0.6% to 1,624.07 at close in Tokyo, headed for third quarterly advance in four
  • Nikkei 225 +0.5% at 20,220.30
  • Yen little changed at 112.34 per dollar
  • Topix Banks +1.8%
    • Mitsubishi UFJ Financial +1.1%, Sumitomo Mitsui Financial +1.2%, Nomura Holdings +1.8%
  • Nintendo +2.4%, SoftBank Group +0.6%
  • Sony +0.9%
    • To produce records for first time in 29 years: Nikkei
  • J Front Retailing +8.7% biggest gain since Nov. 10 and best performer on Nikkei 225; reported 1Q consolidated operating profit rose 37% y/y to 13b yen
  • Kuroda Electric +4.1%; shareholders approve Reno proposal, Nikkei reports
  • Toshiba -3.7%; sues Western Digital for 120b yen in damages
  • Nitori -6.8%; 1Q operating profit drops, MS-MUFG downgrades to equal-weight

For more on Japan markets:
Yen Bears Need More Than BOJ Support as Recovery Hints Seen
Japan Power Trading Booms as Old Utilities Dip Toe in Market
Takata’s Founding Clan Takes $2.7 Billion Air-Bag Crisis Hit
Japan Tobacco Chases Marlboro Man’s Maker in Smokeless Race
Japan Retail Growth Slows as Wages Continue to Disappoint

— With assistance by Yuko Takeo

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