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Sunday, August 04, 2013

Japan Stocks Rise as Yen Drops, U.S. Manufacturing Climbs

Japanese stocks rose, with the Topix index posting its biggest advance in five weeks, as the yen touched its lowest against the dollar in a week and U.S. factory activity surged.


Toyota Motor Corp., Asia’s biggest carmaker, rose 3.4 percent on the yen’s drop and before reporting earnings after markets closed. Suzuki Motor Corp. jumped 5.8 percent after the automaker raised its full-year profit forecast.

Sharp Corp., which supplies screens to Apple Inc., gained 3.4 percent after posting a narrower loss than expected. Japan Exchange Group Inc. added 5.8 percent after the bourse said it’s in talks to provide its trading system to Tokyo Commodity Exchange Inc.

The Topix gained 2.8 percent to 1,196.17 at the close in Tokyo, the biggest rally since June 28. The gauge gained 2.5 percent this week.

The Nikkei 225 Stock Average climbed 3.3 percent today to 14,466.16. U.S. manufacturing expanded in July at the fastest pace in more than two years, while investors awaited U.S. jobs data today that may give clues on when the Federal Reserve will start tapering record stimulus.

“The biggest reason to buy Japanese stocks today is that strong U.S. data boosted U.S. yields and weakened the yen,” said Kuninobu Takeuchi, Tokyo-based executive portfolio manager at DIAM Co., which oversees more than $124 billion in assets globally.

“First-quarter earnings are pretty good. Investors are buying on dips even after some companies miss analysts’ full-year estimates.”

The Topix (TPX) rose 39 percent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus.

The equity gauge traded at 1.26 times book value today, compared with 2.51 for the Standard & Poor’s 500 Index and 1.68 for the Stoxx Europe 600 Index yesterday.

Yen Drops

Shares advanced after the yen slumped 1.7 percent, the biggest drop since April, to 99.54 per dollar yesterday. It touched 99.75 today.

Toyota gained 3.4 percent to 6,430 yen. Nissan Motor Co., a carmaker that gets 34 percent of sales in North America, rose 3.1 percent to 1,071 yen. Toyota raised its profit forecast by 8 percent, the company said after markets closed.

The weaker yen is boosting the value of Japanese cars sold overseas, it said. Of the 183 companies on the Topix that have posted quarterly results and for which Bloomberg had estimates, 57 percent beat projections. Suzuki gained 5.8 percent to 2,569 yen after raising its full-year net forecast 11 percent to 100 billion yen.

Sharp climbed 3.4 percent to 425 yen after the company’s net loss totaled 18 billion yen in the three months through June, compared with a 138 billion-yen loss a year earlier.

U.S. Manufacturing

Futures on the S&P 500 added 0.1 percent today. The measure rose above 1,700 for the first time in New York yesterday. The Institute for Supply Management’s factory index for July jumped to 55.4, exceeding the highest projection in a Bloomberg survey of economists, according to the Tempe, Arizona-based group.

The data came after the Federal Reserve said on July 31 that persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month.

Separately, U.S. payrolls are expected to rise by 185,000 in July after a 195,000 gain in June, while the jobless rate may fall to 7.5 percent from 7.6 percent, according to a Bloomberg survey ahead of official data due today.

Among other stocks that gained, Japan Exchange, the operator of the biggest stock market outside the U.S. by value of companies listed, added 5.8 percent to 10,030 yen.

Tokyo Commodity Exchange, known as Tocom, is examining options beyond next May when its five-year contract to use the trading platform of Nasdaq OMX Group Inc. comes up for renewal, said spokeswoman Sayaka Sato.

It may keep and upgrade the Nasdaq system or shift to a platform provided by a different domestic or overseas exchange, she said. The two companies are in talks and nothing has been decided yet, Japan Exchange spokesman Naoya Takahashi said.

bloomberg.com 

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