Japanese Stocks Face Surge in Yen Volatility as Market Reopens

Aya Wagatsuma and Momoka Yokoyama, Bloomberg News

A view from the 52nd floor of the Azabudai Hills Mori JP Tower includes Tokyo Tower, center, in Tokyo, Japan, on Tuesday, Aug. 8, 2023. Azabudai Hills, the latest large-scale real estate project by Mori Building Co., will open for business on Nov. 24, seeking to boost Tokyo’s attractiveness as an international destination. Photographer: Toru Hanai/Bloomberg , Bloomberg

(Bloomberg) -- Japanese stocks rose after Monday’s holiday, as major firms released strong corporate earnings. Hitachi was one of the biggest gainers on the Topix, which advanced the most in more than two months.

The Nikkei 225 Stock Average climbed 1.2% to 38,405.66 as of the market close. The broader Topix advanced 2.1% to 2,743.17. The yen was at 156.84 per dollar, after rebounding Monday from a slump past 160 that sparked suspicion the nation’s government intervened to support the currency.

Toyota Motor contributed the most to the Topix’s gain, increasing 3.6%. Out of 2,146 stocks in the index, 1,782 rose and 309 fell, while 55 were unchanged.

Hitachi surged 8.5%, the most since March 2020, after its full-year adjusted operating income forecast beat the average analyst estimate. Komatsu climbed 12%, closing at the highest in about five decades, after it announced a buyback of as much as ¥100 billion alongside its fourth quarter earnings results.

Yen Traders See Uphill Battle for Japan to Halt Currency’s Slide

The Nikkei 225 earlier this year rose above its historic peak marked in 1989, driven by factors including a weaker yen, hopes of improving corporate governance and signs inflation is taking hold. The gauge has risen about 33% over the past year, but only around 15% in dollar terms.

While the currency’s depreciation boosts the value of overseas revenue in yen terms, business leaders are concerned that the weakening will raise import costs. Some analysts have said the currency’s level may become a liability for the economy and stocks.

“Further yen depreciation could be a bad story, and intervention speculation is a positive for stock prices,” said Ryuta Otsuka, a strategist at Toyo Securities.

Sumitomo Corp. shares surged after activist investor Elliott Management Corp. was said to have built a “large” stake in the Japanese trading house.

ADVANCERS

XNet (4762) +26%
PeptiDream (4587) +25%
Mitsubishi Electric (6503) +16%; Mitsubishi Electric Volume Jumps to Almost Nine Times Average

DECLINERS

Jimoto (7161) -18%
Land Co (8918) -13%
Kyoei Steel (5440) -11%; Kyoei Steel FY Operating Income Forecast Misses Estimates

INSIGHTS

31 of the 33 sector indexes on the Tokyo Stock Exchange advanced; Tokyo Stock Exchange TOPIX Marine Transportation Index was the best performer, while Tokyo Stock Exchange TOPIX Air Transportation Index fell the most
The MSCI AC Asia Pacific Index was up 0.7%
Topix Index is up 16% year-to-date, vs. MSCI AC Asia Pacific Index up 3.2%
Topix Index members are trading at 15.3 times their estimated earnings for the next 12 months