Japanese Stocks Rise on Earnings Expectations Fed to Cut Rates
Japanese Stocks Rise on Earnings, Expectations Fed to Cut Rates
By Patrick Rial
Jan. 29 (Bloomberg) — Japanese stocks rose on speculation
the U.S. Federal Reserve will cut interest rates this week to
prop up growth in Japan;s largest export market. Nippon Yusen
led gains by companies reporting better-than-expected earnings.
Mitsubishi UFJ Financial Group Inc. led a gain by banks.
Toyota Motor Corp. climbed after HSBC Holdings Plc boosted its
share recommendation, saying this year;s sell-off was
unwarranted. Reports showing unemployment and consumer spending
were better than forecast also lifted shares.
“Negative sentiment in the market has been taken to an
extreme, as the U.S. doesn;t look like it;s headed for recession
and Japan;s not as bad as people say,;; said Hiroshi Chano, who
helps manage $7.3 billion at Yasuda Asset Management Co. in
Tokyo. “Rate cuts from the Fed, and probably in Europe too, are
going to create liquidity and that should help the stock
market.;;
The Nikkei 225 Stock Average rose 390.95, or 3 percent, to
13,478.86 at the close of trading in Tokyo. The broader Topix
index climbed 35.70, or 2.8 percent, to 1,328.73. The benchmark
fell as much 17 percent this year amid mounting concern the U.S.
economy will fall into a recession. The gauge has rebounded 8.9
percent from its Jan. 22 low.
Mitsubishi UFJ, Japan;s largest bank by market value,
jumped 45 yen, or 4.6 percent, to 1,030. Sumitomo Realty %26amp;
Development Co., the nation;s third-largest property developer,
climbed 145 yen, or 6.1 percent, to 2,525 yen. Real-estate
companies; profit margins hinge on financing costs for their
development projects.
Fed Funds Futures
Traders see an 86 percent chance the Fed will cut its
benchmark lending rate to 3 percent from 3.5 percent on Jan. 30,
according to Fed funds futures, up from 70 percent on Jan. 25.
Nippon Yusen, the nation;s largest shipping line by sales,
rallied 62 yen, or 8.1 percent, to 825, the biggest gain since
October. Fanuc Ltd., the world;s largest maker of industrial
robots, climbed 7.2 percent to 9,110 yen after saying third-
quarter profit jumped 23 percent.
“We forecast the factory automation and robot segments
will generate strong auto industry-related sales,;; Teruhiko
Nishimura, an analyst at Credit Suisse Group in Tokyo, wrote in
a note to clients.
Toyota, the world;s No. 2 automaker, gained 3 percent to
5,500 yen. Seiji Sugiura, an analyst at HSBC in Tokyo, lifted
his recommendation on the shares to “neutral;; from
“underweight.;; The stock dropped by a third in the 12 months
to yesterday.
Exporters Rise
“Share valuations are now at 20-year lows, and we believe
there is little risk of a serious downturn in the U.S. auto
market, or of significant further yen appreciation,;; the
analyst said in a note to clients. “Investors have
overreacted.;;
Other exporters also advanced. Isuzu Motors Ltd., Japan;s
third-biggest maker of commercial vehicles, rallied 38 yen, or
9.6 percent, to 433 yen, the biggest advance among the 225
members of the Nikkei, boosted by an upgrade from Goldman, Sachs
%26amp; Co. Komatsu Ltd., the world;s second-largest maker of
construction machinery, rose 4.5 percent to 2,545 yen.
Trading companies rallied after commodities prices climbed.
Mitsui %26amp; Co., which generates more than half of its income from
commodities trading, rallied 141 yen, or 7.2 percent, to 2,095,
the biggest gain since Jan. 30, 2006. Mitsubishi Corp., the
nation;s largest trading company, rose 7 percent to 2,820 yen.
Prices for gold, platinum and coal rallied to records
today. A measure of six metals traded on the London Metal
Exchange, including copper and zinc, added 0.4 percent
yesterday.
Hoya Drops
Japan;s unemployment rate held steady at 3.8 percent in
December, the government said, while household spending jumped
2.2 percent from the previous year. Economists had forecast the
jobless rate to rise and spending to slip in December.
Hoya Corp., Japan;s largest maker of optical glass, fell
for a second day after saying product delays and price cuts will
reduce profit. The shares dropped 305 yen, or 9.8 percent, to
2,815, bringing its two-day drop to 19 percent, the worst loss
over two sessions since August 1990.
Nikkei futures expiring in March gained 3.1 percent to
13,450 in Osaka and added 2.9 percent to 13,415 in Singapore.
The Topix has moved more than 2 percent in a day 10 times this
month, compared with five times in all of 2005.
To contact the reporter for this story:
Patrick Rial in Tokyo at
