Japanese stock futures rose after Toyota Motor Corp. raised its profit forecast to a five-year high and the yen weakened to the lowest level since May 2010, boosting the earnings outlook for exporters. Australian shares gained.
American Depositary Receipts of Toyota, the world’s largest carmaker, climbed 2.1 percent after increasing its full-year net income estimate by 10 percent to 860 billion yen ($1.2 billion). ADRs of Canon Inc., the camera maker that gets 80 percent of its sales overseas, gained 2.6 percent as the yen weakened against the dollar. Atlas Iron Ltd., an Australian iron ore producer, rose 4.5 percent as metals prices advanced.
Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 11,275 in Chicago yesterday, up from 11,080 at the close in Osaka, Japan. They were bid in the pre-market at 11,250 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained 0.6 percent. New Zealand’s market is closed for a public holiday.
“Japan’s recent strong equity market performance has substantially further to run as the market further discounts the positive impact of Abenomics,” Jonathan Garner, chief Asia and emerging-market strategist at Morgan Stanley in Hong Kong, wrote in a report to clients where he advised global investors to favor Japanese stocks over U.S. and European shares. “We expect the market to trade more on positive earnings revisions, rather than purely tracking yen weakness.”
Prime Minister Shinzo Abe’s calls for monetary policy easing have helped the yen weaken against all other currencies since mid-November, driving the Topix Index on Feb. 4 to the highest level since March 2011. Bank of Japan Governor Masaaki Shirakawa yesterday said he will step down on March 19, three weeks before his term was due to expire, accelerating a leadership transition that may aid Abe’s campaign for aggressive easing. The yen fell to 93.69 per dollar as of 7:52 a.m. in Tokyo, the lowest level since May 2010.
Of the 177 companies on the Topix that have reported earnings so far this quarter and for which Bloomberg has estimates, 62 percent have exceeded profit expectations. Some 52 percent missed sales projections, the data compiled by Bloomberg show. The Topix trades at 1.11 times book value, compared with 2.07 for the Standard & Poor’s 500 Index and 1.47 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the S&P 500 rose 0.1 percent. The gauge rose 1 percent yesterday, rebounding from the biggest loss of the year for benchmark indexes, as earnings topped forecasts and Dell Inc. agreed to be taken private in the largest leveraged buyout since the financial crisis.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 0.2 percent to 97.66 in New York yesterday. The Thomson Reuters/Jefferies CRB Index of raw materials gained 0.4 percent.
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