Bloomberg News

Japanse Stocks Advance on U.S. Retail Sales, Weaker Yen

October 16, 2012

Japanese shares rose, with the Nikkei 225 (NKY) Stock Average increasing the most in about a month, as exporters gained after U.S. retail sales beat estimates and the yen weakened.

Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, rose 2.4 percent. Softbank Corp. (9984), the nation’s third-biggest mobile-phone carrier, soared 9.6 percent after agreeing to acquire Sprint Nextel Corp. for $20.1 billion. Kirin Holdings Co., the biggest Japanese brewer by market value, sank 2.4 percent after cutting its 2015 sales forecast on a weaker outlook for beer sales.

The Nikkei 225 gained 1.4 percent to 8,701.31 at the 3 p.m. close in Tokyo, the steepest advance since Sept. 14. The broader Topix climbed 1.3 percent to 732.40, with more than three times as many shares rising as falling.

“Personal consumption in the U.S. is getting more solid than expected,” said Fumiyuki Nakanishi, a strategist at Tokyo- based SMBC Friend Securities Co. Stronger retail sales “will likely encourage expectations for year-end sales and favorable October-December corporate earnings.”

The Topix has risen 1.9 since Sept. 6 when the European Central Bank started a global wave of stimulus to fight a slowdown in growth, with the U.S. Federal Reserve and the Bank of Japan following suit. The price of shares on the equity gauge stood at 0.9 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.5 times for the Europe Stoxx 600 Index.

U.S. Retail

Futures on the S&P 500 (SPXL1) added 0.1 percent today. The gauge climbed 0.8 percent yesterday after U.S. retail sales gained 1.1 percent in September following a revised 1.2 percent increase in August, the best back-to-back showing since late 2010, Commerce Department figures showed. A Bloomberg survey of economists called for a 0.8 percent rise.

Shares also gained as Citigroup Inc. reached a six-month high after reporting a surprise third-quarter profit and bond- trading revenue that beat expectations.

The U.S. retail report was “not bad and such economic data is weakening the yen, which is good for Japanese markets,” said Seiichiro Iwamoto, who helps oversee about $34 billion at Mizuho Asset Management Co. in Tokyo. “Investors’ strong inclination to seek safety is easing.”

The yen fell against all of its 16 major counterparts, depreciating to as low as 78.91 against the dollar today in Tokyo, compared with 78.56 at the close of stock trading yesterday. The Japanese currency weakened to 102.39 against the euro from 101.47. A weaker yen boosts the value of overseas income at Japanese companies when repatriated.

Sony rose 2.4 percent to 937 yen. Kyocera Corp., an electronics maker that gets almost a third its sales from Europe and the U.S., gained 2.7 percent to 6,770 yen.

Softbank Acquisition

Softbank soared 9.6 percent to 2,485 yen, the biggest gain on the Nikkei 225, after agreeing to buy about 70 percent of Sprint Nextel for $20.1 billion to expand into the U.S. mobile- phone services market. The deal will be funded by cash and bridge financing, and Softbank won’t issue new shares, President Masayoshi Son said yesterday.

Kirin lost 2.4 percent to 1,009 yen. The brewer cut its 2015 sales forecast on weakening demand in Japan and expectations for slower growth at its Australian unit. Sales at Kirin will reach at least 2.3 trillion yen ($29.3 billion) by 2015, lower than an earlier projection of 3 trillion yen.

A gauge of volatility on the Nikkei 225 rose 1.3 percent to 17.58, indicating that traders expect a swing of 5 percent on the equity benchmark in the next 30 days.

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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