TOKYO, Aug 6 — Japanese stocks rose, with the Topix index headed toward its highest close since 2007, as investors weigh company earnings and after the yen weakened against the dollar amid better-than-estimated US economic data.
Toyota Motor Corp. added 1.4 per cent. Nippon Telegraph & Telephone Corp. rose 4.4 per cent after saying it will buy back as much as ¥100 billion (RM3.12 billion) of shares. Milk producer Meiji Holdings Co. surged a record 19 per cent after boosting its profit forecast. Pump maker Ebara Corp. slumped 7.6 per cent after posting a wider net loss.
The Topix index added 1.2 per cent to 1,685.89 at the trading break in Tokyo, with all but four of its 33 industry groups rising. The Nikkei 225 Stock Average climbed 0.8 per cent to 20,774.90. The yen traded at 124.78 per dollar after weakening 0.4 per cent yesterday, a third day of losses, as services-industry data indicated the US economy is on track for faster growth, raising prospects for an interest-rate hike next month.
“The Topix and Nikkei are sustaining highs because overall earnings are good, and that’s acting as a support,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which oversees 5.8 trillion yen. “A US rate increase in September is likely. The first increase has already been priced into a weaker yen, so the focus is on the pace of the second and third increases.”
More than 160 firms on the Topix index report earnings today. Of the companies that have posted quarterly results this season and for which estimates are available, 64 per cent exceeded profit expectations, an improvement from the 48 per cent that beat forecasts in the previous quarter, according to data compiled by Bloomberg.
US futures
E-mini futures on the Standard & Poor’s 500 Index fell less than 0.1 per cent after the underlying measure gained 0.3 per cent yesterday in New York.
Investors are watching US economic reports to gauge when the Federal Reserve will increase interest rates, a decision it has forecast for this year. Data yesterday showed service providers from restaurants to real-estate agencies expanded in July at the strongest pace in a decade, putting the economy on track for faster growth.
The government’s monthly job report on Friday is projected to show US employers took on 225,000 workers last month, while the jobless rate held at a seven-year low of 5.3 per cent.
Interest-rate futures traders are pricing in a 48 per cent probability that the Fed will raise rates in September, up from a 38 per cent chance earlier this week.
“The ISM non-manufacturing data has strengthened the view that US rate hikes will come earlier, weakening the yen,” Yutaka Miura, a technical analyst at Mizuho Securities Co. in Tokyo said by phone. “The weaker currency will be a tailwind for Japanese stocks. We’ll still see a focus on individual earnings results.” — Bloomberg
