Japanese shares advanced, with the Nikkei 225 Stock Average (NKY) halting a two-day decline, as the yen dropped against all its major counterparts, boosting the outlook for exporters.
Honda Motor Co. (7267), a carmaker that gets 81 percent of its sales outside Japan, rose 1.6 percent. Gakken Holdings Co. surged 34 percent, leading gains among education-related shares, on a report individuals may receive a tax exemption on money left for their grandchildren’s schooling. Furukawa-Sky Aluminum Corp. added 4.1 percent after industry bellwether Alcoa Inc.’s sales rose more than expected to open U.S. earnings season.
The Nikkei 225 Stock Average advanced 0.5 percent to 10,555.01 at the close in Tokyo after dropping as much as 1 percent. The broader Topix (TPX) Index rose 0.8 percent to 879.05, reversing losses after the yen weakened to as low as 87.55 against the dollar.
“Japanese stocks are highly sensitive to the yen’s level and today’s market is a prime example,” said Fumio Matsumoto, a fund manager who helps oversee about 73 billion yen ($834 million) in Japanese equities at T&D Asset Management Co. “The yen trading near 90 per dollar will lift corporate earnings.”
The Topix has risen 22 percent since Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus. An advance of 20 percent or more from a low signals a bull market to some investors. The gauge is trading at 1.04 times book value, compared with 2.19 for the Standard & Poor’s 500 Index (SPXL1) and 1.58 for the Stoxx Europe 600 Index.
Japan’s Chief Cabinet Secretary Yoshihide Suga, commenting today on the selection of the next Bank of Japan governor, said candidates should understand the need for bold monetary easing. Governor Masaaki Shirakawa ends his five-year term on April 8.
Exporters gained as the yen fell against all 16 of its major peers. A weaker yen boosts the value of overseas earnings for Japanese companies.
Honda gained 1.6 percent to 3,250 yen. Fanuc Corp. (6954), the world’s biggest maker of factory automation systems, added 1 percent to 15,860 yen.
Futures on the S&P 500 Index added 0.1 percent today. The gauge dropped 0.3 percent yesterday as investors awaited results from Alcoa Inc. to kick off corporate earnings season.
Furukawa-Sky Aluminum Corp. added 4.1 percent to 256 yen after Alcoa, the largest U.S. aluminum producer, rose in after- hours trading as sales beat estimates.
Education stocks jumped after Kyodo News reported the ruling Liberal Democratic Party is weighing a tax exemption on gifts of as much as 15 million yen to provide for grandchildren’s schooling.
Gakken, a publisher of educational books and magazines, soared 34 percent to 317 yen, its biggest jump on record. TAC Co., which runs preparatory courses for professional certificates, surged 33 percent to 200 yen, also the biggest increase ever.
Shares fell earlier after technical indicators signaled the market may have been overbought. The 25-day Toraku index, which compares the number of stocks that have advanced with the number that have declined on the Topix, was at 136 yesterday. A reading above 120 indicates to some investors shares may be poised to fall.
Toho Co., a movie studio and theater operator, gained 4.6 percent to 1,596 yen after announcing it would buy back shares and raise a planned dividend.
The Nikkei Stock Average Volatility Index (VNKY) added 1.9 percent to 19.42, indicating traders expect a swing of about 5.6 percent on the benchmark gauge over the next 30 days.
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