Bloomberg News

Japan Stocks Gains as Merchant Sentiment Jumps Most in Two Years

June 08, 2011

June 8 (Bloomberg) -- Japanese stocks gained for a second day after sentiment among merchants jumped the most in more than two years, suggesting consumers may be recovering from the country’s worst disaster since World War II.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded lender, gained 0.8 percent after JPMorgan Chase & Co. raised its rating on the banking sector. Sumitomo Rubber Industries Ltd., Japan’s second-largest tiremaker, led rubber- products makers higher after Citigroup Inc. said tire demand is still strong. Tokyo Electric Power Co., owner of the nuclear power plant crippled by the March 11 earthquake and tsunami, dropped 7.4 percent after the Nikkei newspaper said the government may idle of all of the country’s atomic plants.

The Nikkei 225 Stock Average rose 0.1 percent to 9,449.46 at the 3 p.m. close in Tokyo, erasing an earlier loss that came as the yen rose to its highest in a month against the dollar, cutting the earnings outlook for exporters. The broader Topix index rose 0.1 percent to 814.45 after a gauge of confidence among Japanese merchants rose the most since March 2009.

“People think the job markets and wages are going to get better,” said Ikuo Mitsui, who helps manage $25 million at Vivace Capital Management Co. “For the market, there’s a feeling that the economy and corporate performance are going to recovery more quickly.”

Fukushima Disaster

The Topix has tumbled 13 percent since March 10, a day before the magnitude-9 earthquake and tsunami that devastated Japan’s northeast coast, damaging Tokyo Electric’s Fukushima Dai-Ichi plant and leaving almost 24,000 people dead or missing.

The Economy Watchers current conditions index, a survey of barbers, taxi drivers and others who deal with consumers, rose to 36 from 28.3 in April and 27.7 in March, the Cabinet Office said today in Tokyo. A reading above 50 indicates people think conditions are improving.

Mitsubishi UFJ Financial Group and its closest rival Sumitomo Mitsui Financial Group Inc. both climbed 0.8 percent after JPMorgan raised the banking sector to “bullish” from “neutral.”

Makers of tires and other rubber products had the biggest gain among the Topix’s 33 industry groups after Citigroup maintained its “buy” rating on the sector, saying retail demand for tires is “strong.”

Sumitomo Rubber gained 2.4 percent to 985 yen after Citigroup boosted the stock price estimate to 1,240 yen from 1,050 yen, while Bridgestone Corp., the world’s biggest tiremaker, rose 1.6 percent to 1,837 yen. Its target price was raised to 2,480 yen from 2,260 yen.

‘Frustratingly Slow’

Stocks plunged earlier after Federal Reserve Chairman Ben S. Bernanke described the U.S. recovery as “uneven” and “frustratingly slow,” while offering no hint of a new round of economic stimulus. The Fed’s policy of buying treasuries to prop up demand, known as quantitative easing is due to finish this month.

“Economic data has been soft so markets seemed to be hoping Bernanke would offer a bit more,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages about $98 billion in Sydney.

The Standard & Poor’s 500 Index fell for a fifth day yesterday in New York, the longest slump for the S&P in almost a year, sliding 0.1 percent to its lowest level since March 18. Recent data showing weakness in the economy, including an increase in the unemployment rate to 9.1 percent in May, has raised the odds the Fed will hold the benchmark interest rate near zero into next year.

Shippers Rise

Japanese shipping companies gained after Mitsubishi UFJ Morgan Stanley Securities Co. said that the market for cargo transport will “bottom out.’ Kawasaki Kisen Kaisha Ltd. climbing 1.2 percent to 264 yen. Mitsubishi UFJ raised its investment rating to “outperform” from “neutral.”

Bigger rival Nippon Yusen K.K. rose 1.4 percent to 294 yen after its price estimate was boosted to 390 yen from 370 yen.

Tokyo Electric tumbled 7.4 percent to 200 yen, the biggest drop on the Nikkei 225, after the Nikkei newspaper reported the government may for utilities to idle all 54 of Japan’s nuclear reactors by next spring if those shut down for scheduled maintenance don’t receive the required local approval to restart.

--Editors: Jason Clenfield, Nick Gentle.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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