Japan Had Another Huge Day As Everyone Expects Unlimited Monetary Stimulus

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Photo: Petar Kujundzic-Pool/Getty Images

Nov. 16 (Bloomberg) — Japan’s Topix Index capped the biggest two-day gain since March 2011 amid surging volume as the yen weakened on speculation elections next month will hand power to an opposition party pushing for more central-bank easing.Exporters Canon Inc. and Honda Motor Co. gained more than 5 per cent as the currency’s depreciation boosting the earnings outlook. Daiwa Securities Group Inc. jumped 7.1 per cent to lead gains among brokerages. Ube Industries Ltd. sank 5.6 per cent after Citigroup Inc. and Nomura Holdings Inc. cut their equity ratings on the chemicals maker.

The Topix rose 1.9 per cent to close at 751.34 in Tokyo, with more than three shares advancing for each that fell. The gauge rose 4 per cent in the last two days after elections were called for next month. For the week, the measure climbed 2.8 per cent. The Nikkei 225 Stock Average rose 2.2 per cent to 9,024.16 on volume 62 per cent above the 30-day average.

“There’s expectation the new party will increase stimulus heavily, making Japanese shares relatively more attractive,” said Seiichiro Iwamoto, who helps oversee about $33 billion at Mizuho Asset Management Co. in Tokyo. “Investors are changing to a risk-on mood.”

Prime Minister Yoshihiko Noda dissolved parliament today, triggering an election on Dec. 16 that polls suggest his Democratic Party of Japan will lose. Shinzo Abe, the leader of the main opposition Liberal Democratic Party, called yesterday for the central bank to pursue unlimited monetary stimulus to end deflation and revive an economy that shrank last quarter at the fastest pace since the 2011 earthquake.

Brokerages gained the most among the Topix’s 33 industry groups. Daiwa Securities jumped 7.1 per cent to 348 yen. Nomura Holdings, Japan’s largest brokerage, advanced 5 per cent to 316 yen.

Yen Weakens

Exporters gained after the yen depreciated to as low as 81.46 against the dollar last night in Tokyo, the weakest level since April 25. Against the euro, Japan’s currency weakened to 103.99 today from 103.13 at the close of stock trading yesterday. A weaker yen boosts overseas income at Japanese companies when repatriated.

Canon, the world’s biggest camera maker, jumped 5.8 per cent to 2,697 yen. Honda Motor, a carmaker that gets about 80 per cent of its sales abroad, climbed 5.1 per cent to 2,591 yen. Bridgestone Corp., the world’s largest maker of tires, rose 3.8 per cent to 1,875 yen.

The Topix has fallen 19 per cent since the DPJ took power on Sept. 16, 2009. The Standard & Poor’s 500 Index of U.S. shares advanced 27 per cent in the same period

Futures on the Standard & Poor’s 500 Index slid 0.1 per cent today. The measure fell 0.2 per cent yesterday as Wal-Mart Stores Inc. forecast earnings that missed estimates and lawmakers prepared for budget talks.

Ube Industries declined the most in the Nikkei 225, falling 5.6 per cent to 170 yen after Citigroup cut the chemicals maker’s rating to neutral, saying a recovery in the market for materials used in nylon will take time. Nomura cut its rating to reduce from neutral.

–Editor: Jason Clenfield

To contact the reporter on this story: Norie Kuboyama in Tokyo at [email protected]

To contact the editor responsible for this story: Nick Gentle at [email protected]

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