Japanese Shares Little Changed After Biggest Rally in Two Months

Apr 17, 2014 3:37 am ET

April 17 (Bloomberg) -- Japanese shares closed little changed after the Topix index swung between gains and losses following the steepest rally in two months yesterday. Textile makers rose while the yen dragged on exporters.

The Topix Textiles and Apparels Index advanced 1.1 percent for the biggest gain among the broader gauge’s 33 industry groups. Canon Inc. climbed 1.3 percent on a report the world’s largest camera maker will post a 50 percent gain in quarterly operating profit. Honda Motor Co., which gets more than 80 percent of sales overseas, lost 2.1 percent as the yen strengthened for the first time in five days.

The Topix closed at 1,166.59 after yesterday rising 2.7 percent, the most since Feb. 18. The Nikkei 225 Stock Average was also unchanged today at 14,417.53. The yen gained 0.3 percent to 101.96 per dollar. The Standard & Poor’s 500 Index climbed for a third day yesterday.

“The U.S. economy is fundamentally good,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “But rather than there being a lot of buying from investors, it’s more like the selling has stopped.”

S&P 500 futures lost 0.2 percent today. The U.S. equity benchmark yesterday erased its loss for the year as Yahoo! Inc. earnings topped estimates and industrial production gained 0.7 percent in March from February, beating analysts’ projections for a 0.5 percent gain.

Yellen Speech

Federal Reserve Chair Janet Yellen, in her first major speech on her policy framework, yesterday said U.S. central bankers must be mindful of how short the Fed is of its goals of full employment and price stability.

Toray Industries Inc., a manufacturer of yarn and other textiles, gained 1 percent to 679 yen to provide the biggest boost to the group. Toyobo Co., which makes synthetic fibers, rose 3.1 percent to 165 yen.

Canon rose 1.3 percent to 3,218 yen, the third-biggest boost to the Topix, after the Nikkei newspaper said the electronics maker’s operating profit last quarter probably rose about 50 percent to 80 billion yen.

Japan’s Cabinet Office is due to release its monthly economic assessment today. While the report will retain the phrase that the economy “is recovering at a moderate pace,” it will warn about weakness in consumer sentiment, and a drop in spending after this month’s 3 percentage point sales-tax increase, the Nikkei reported yesterday.

Consumer Confidence

Data today showed that Japan’s consumer confidence fell in March to the lowest level since August 2011, a reading that may tumble further this month after the sales-tax increase sapped the public’s spending power.

The yen first advance in five days today dragged on export shares. Carmakers and consumer electronic makers were the biggest drags on the Topix among the industry groups.

Honda slumped 2.1 percent to 3,459 yen, the biggest drag to the Topix. Panasonic Corp., which gets almost half its revenue outside of Japan, slid 1.4 percent to 1,108 yen.

Alps Electric Co., a maker of electronic parts, declined the most on the Nikkei 225 after Bank of America Corp.’s Merrill Lynch unit cut its target price on the stock to 1,470 yen from 1,550 yen. Alps tumbled 4.7 percent to 1,119 yen.

The Topix tumbled 6.7 percent last week to extend its 2014 decline to 13 percent, the steepest among 24 developed markets tracked by Bloomberg. The measure is headed today a 2.9 percent increase this week.

The Japanese equity gauge traded at 1.14 times book value today compared with 2.6 for the Standard & Poor’s 500 Index and 2.18 for the Stoxx Europe 600 Index. Trading volume on the Japanese gauge was 11 percent below the 30-day average today.