Bloomberg News

Japan Stocks Rise as BOJ Meets, U.S. Factory Data Beats

April 03, 2013

April 3 (Bloomberg) -- Japanese stocks rose, with the Nikkei 225 Stock Average (NKY) capping the biggest rally in eight weeks, after demand for motor vehicles boosted U.S. factory orders and the Bank of Japan started a policy meeting.

Honda Motor Co. (7267), which gets 44 percent of its revenue in North America, rose 4.6 percent. Tokyo Electric Power Co. (9501), the utility at the center of the 2011 nuclear crisis, soared 24 percent on a report it will save money by switching to coal- fired power plants. Fast Retailing Co. (9983), Asian’s biggest apparel chain, jumped 11 percent after saying same-store sales at its Uniqlo Japan outlets surged 14 percent in March from a year earlier.

The Nikkei 225 Stock Average gained 3 percent to close at 12,362.20 in Tokyo, the biggest gain since Feb. 6. The Topix Index advanced 1.9 percent to 1,010.43 after slumping 4.2 percent over the past two days. About eight stocks gained for each that fell on the gauge.

“The BOJ will have to show progress toward its inflation target in order to achieve it in the long term,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “In the U.S., growth-sensitive sectors like cars and housing are finally showing improvement.”

The Nikkei 225 rallied 43 percent from Nov. 14, when Japanese elections were announced, amid optimism new Prime Minister Shinzo Abe’s government and the Bank of Japan (8301) will take more steps to beat deflation. The gauge traded at 18.9 times estimated earnings on average, compared with 14.2 for the Standard & Poor’s 500 Index and 12.7 for the Stoxx Europe 600 Index.

BOJ Meeting

The BOJ will boost monthly bond purchases by about 50 percent to 5.2 trillion yen ($55.6 billion) at a two-day meeting ending tomorrow, the first after BOJ Governor Haruhiko Kuroda took the post, according to the average forecast in a survey of economists by Bloomberg News.

Futures on the S&P 500 (SPX) were little changed. The measure climbed 0.5 percent yesterday after the Commerce Department report showed a 3 percent gain in factory orders, citing a pickup in demand for motor vehicles and commercial aircraft. The median forecast of economists in a Bloomberg survey called for a 2.9 percent increase.

‘Improving Steadily’

“The U.S. economy is improving steadily,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The new BOJ leadership will probably continue bold monetary easing in the long term and keep expectations high, communicating well with the market.”

Carmakers advanced. Honda added 4.6 percent to 3,525 yen. Mazda Motor Corp. (7261), which gets 28 percent of its sales in North America, gained 6.5 percent to 279 yen. Toyota Motor Corp. (7203), the world’s biggest carmaker, rose 3.8 percent to 4,790 yen.

Tokyo Electric soared 24 percent to 313 yen as it may save 175 billion yen per year by switching to coal-fired power plants, Kyodo News reported. The stock surged the most since Dec. 17, leading gains on the Nikkei 225.

Fast Retailing, the most heavily- weighted stock on the Nikkei 225, jumped 14 percent to 35,650 yen after saying warmer weather and an extra Sunday in March fueled the biggest monthly sales jump in more than three years.

Among stocks that fell, Nippon Steel & Sumitomo Metal Corp. (5401), Japan’s biggest steelmaker by market value, and JFE Holdings Inc. (5411), the second biggest, dropped after their ratings were cut to neutral from outperform at Credit Suisse Group AG. Nippon Steel lost 2.7 percent to 216 yen and JFE declined 2.8 percent 1,646 yen.

The Nikkei Stock Average Volatility Index (VNKY) dropped 2.3 percent to 27.08 today, indicating traders expect a swing of about 7.8 percent on the benchmark gauge over the next 30 days. Trading volume on the Nikkei 225 was 8.9 percent above the 30- day average.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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