Bloomberg News

Japan Stocks Rise Third Day on U.S. Jobs, Weaker Yen

November 02, 2012

Japanese stocks rose for a third day as the yen weakened and reports on U.S. employment, manufacturing and consumer confidence signaled improvement in the world’s largest economy.

Bridgestone Corp. (5108), a tiremaker that counts the Americas as its biggest market, rose 2.3 percent. Sumitomo Heavy (6302) Industries Ltd. jumped 6.6 percent after its operating profit fell less than forecast. Sharp Corp. (6753) slid 2.4 percent after the TV maker projected a record loss and said there was “material doubt” about its survival.

The Nikkei 225 Stock Average (NKY) rose 1.2 percent to 9,051.22 at the 3 p.m. close in Tokyo, with a weekly gain of 1.3 percent. Volume on the gauge was more than 10 percent more than the 30- day average for the time of day. The broader Topix (TPX) Index climbed 1.2 percent to 752.09, with more than three shares advancing for each that fell.

“The U.S. economy was kind of stagnant but recently seems to be showing improvement, which is giving investors more faith in the global outlook,” Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about $75 billion. “There’s a feeling that with restructuring, a weaker yen and a pick up in the U.S. economy, Japanese companies will recover.”

The Topix has risen 4.6 percent since Sept. 6 after the European Central Bank started a global wave of stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the equity gauge traded at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.

U.S. Jobs

Futures on the S&P 500 were little changed today. The gauge yesterday gained 1.1 percent, its biggest advance in seven weeks, on a report U.S. companies expanded payrolls in October by the most in eight months. Adding to signs of recovery, the Institute for Supply Management’s U.S. factory index topped estimates, and a measure of consumer sentiment rose to the highest since February 2008.

The dollar strengthened, sending the yen to 80.3 against the greenback today in Tokyo, compared with 80.02 at the close of stock trading yesterday. A weaker Japanese currency boosts overseas income at companies when repatriated.

Bridgestone rose 2.3 percent to 1,892 yen. Fuji Heavy Industries Ltd., which makes Subaru brand vehicles and counts North America as its biggest market, climbed 3.8 percent to 799 yen.

‘Hit Bottom’

“The U.S. economy is solid and the slowing economy has hit the bottom,” said Juichi Wako, a senior strategist at Tokyo- based Nomura Holdings Inc.

Today’s monthly employment report from the Labor Department will provide more information about the strength of the economy before the presidential election next week. Payrolls probably increased by 125,000 workers in October and the jobless rate rose to 7.9 percent, according to the median forecast of economists surveyed by Bloomberg.

Japan’s earnings season peaked this week, with more than 570 of the 1,676 Topix companies reporting results. Of the 350 companies on the Topix which have reported quarterly revenue since Oct. 1 and for which Bloomberg News has estimates, 65 percent have missed projections.

Sharp lost 2.4 percent to 165 yen after the TV maker said there was “material doubt” about its ability to survive after forecasting a record $5.6 billion full-year loss on falling demand for its display panels. Sharp follows Panasonic Corp. in predicting losses that exceeded analysts estimates after losing ground to Samsung Electronics Co.

Nikon Corp. (7731) declined the most in the Nikkei 225, falling 6.1 percent to 1,928 yen. The camera maker cut its full-year operating profit forecast 15 percent to 72 billion yen, citing slumping capital investments in chip-related industry.

Sumitomo Heavy soared 6.6 percent to 306 yen after the machinery maker said operating profit amounted to 17.4 billion yen in the six months ended Sept. 30, beating its forecast by 29 percent on cost cuts.

The Nikkei Stock Average Volatility Index (VNKY) sank 3.7 percent to 18.42, indicating that traders expect a swing of 5.3 percent on the equity benchmark in the next 30 days.

-- With assistance from Masaaki Iwamoto in Tokyo. Editors: Jim Powell, Jason Clenfield

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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


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