Bloomberg News

Nikkei 225 Advances for 8th Day on U.S. Jobs, Weaker Yen

March 11, 2013

Japanese shares rose, with the Nikkei 225 Stock Average (NKY) posting its longest daily winning streak since 2009, after better-than-forecast U.S. hiring and a weaker yen boosted the earnings outlook for exporters.

Honda Motor Co., which gets about 80 percent of its sales outside Japan, rose 2.6 percent. Resona Holdings Inc. and Shinsei Bank Ltd. surged amid speculation the lenders will follow Sumitomo Mitsui Trust Holdings Inc. in repaying government bailouts. Sharp Corp. (6753) lost 3.1 percent after Kyodo news reported the electronics maker may sell shares.

The Nikkei 225 rose 0.5 percent to close at 12,349.05 in Tokyo. The measure last week recovered its losses since the 2008 collapse of Lehman Brothers Holdings Inc. on optimism Prime Minister Shinzo Abe and his nominee for Bank of Japan governor, Haruhiko Kuroda, will succeed in ending 15 years of deflation. The broader Topix Index (TPX) increased 1.9 percent 1,039.98 today. About four shares rose for each that fell and all but two industry groups gained.

“The U.S. economy leads the global economy, so positive data boosts investor sentiment,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about 498 billion yen ($5.18 billion). “Until now, Japanese shares have risen on the back of Abenomics and monetary-easing expectations from the BOJ. From here on, U.S. fundamentals should contribute to a higher-dollar, weaker-yen situation.”

Abe Surge

The Nikkei 225 jumped 42 through March 8 from Nov. 14 when the general election that swept Abe into power was announced. The equity benchmark’s gain in the period compares with a 7.7 percent rise in Hong Kong’s Hang Seng Index, a 13 percent rally for China’s Shanghai Composite Index and a 14 percent advance for the Standard & Poor’s 500 Index.

After adjusting for the yen’s depreciation against the dollar, the Nikkei 225’s return shrinks to about 19 percent.

The yen traded at 96.13 per dollar today, its weakest level since Aug. 10, 2009. A weaker yen boost overseas earnings for the nation’s exporters when repatriated.

Honda rose 2.6 percent to 3,755 yen, giving the Nikkei 225 its biggest boost. Toyota Motor Corp., the world’s biggest carmaker, rose 1.8 percent to 5,000 yen. Olympus Corp., which gets nearly 20 percent of its sales from North America, advanced 2.9 percent to 2,371 yen, its highest since October 2011.

Futures on the S&P 500 were little changed today. The gauge gained 0.5 percent on March 8, when data showed U.S. employers added 236,000 jobs. The median forecast of economists surveyed by Bloomberg was for a gain of 165,000. The jobless rate fell to 7.7 percent.

Short-Selling

The ratio of short selling to total trading value at the Tokyo Stock Exchange fell to 12 percent on March 8, the lowest since the exchange began releasing data in October 2008. The Nikkei 225 capped a 5.8 percent gain last week, with the measure rising for all but one week since mid-November.

“While there may have been some short-covering last week, I think most of the gains were on fundamental reasons,” said Shinkin’s Fujiwara. “In Japan, I think a lot of individual investors are starting to pile-in. Foreign investors are also buying, and as long as they hedge, they shouldn’t see a problem from the currency devaluations when repatriating.”

Shares rose as Kuroda said the BOJ will consider buying derivatives if he’s confirmed as governor and signaled a readiness to buy more bonds more quickly.

Stocks gained even after data showed the country’s machinery orders plunged 13 percent in January, the biggest decline in eight months, and worse than the 1.7 percent decline predicted by an economists’ survey.

Exiting Bailout

Resona Holdings advanced 14 percent to 531 yen and Shinsei Bank gained 8.4 percent to 245 percent on speculation they would follow Sumitomo Mitsui Trust in repaying public funds.

Sumitomo Mitsui Trust rose 2.3 percent to 437 yen after saying it bought 467 million of its own shares from the government.

Among stocks that dropped, Sharp lost 3.1 percent to 309 yen, the second-biggest drop on the Nikkei 225. Kyodo news reported the company plans to raise about 100 billion yen by selling shares to repay about half its 200 billion yen of convertible bonds due in September.

The Nikkei Stock Average Volatility Index fell 0.6 percent to 26.49 today, indicating traders expect a swing of about 7.3 percent on the benchmark gauge over the next 30 days. Volume on the Nikkei 225 was about 28 percent higher than the 30-day average at the close.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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


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