Japan Stocks Rise as Investors Heartened by China Inflation Data

(Bloomberg) -- Japanese shares rose as investors were encouraged by Chinese inflation data, while awaiting a speech by Federal Reserve Chair Janet Yellen.

The Topix index added 0.4 percent at the close in Tokyo, ending a session during which the gauge swung between gains and losses. Figures on Chinese consumer and producer prices beat expectations Friday after a disappointing trade report on Thursday sparked a regional equity rout as investors fled to haven assets. Oil explorers in Japan advanced after crude prices rose for a second day. Yellen is set to speak at the Boston Fed Conference on Friday.

“With Chinese exports declining, we were a little worried about deflation in China, but prices rose more than expected, and investors have been encouraged,” said Hiroshi Kato, a Tokyo-based senior portfolio manager at Chibagin Asset Management Co. “We don’t need to be excessively worried about China.”

China’s factory-gate prices rose for the first time since 2012, relieving a source of global disinflationary pressure and indicating further stabilization in the world’s second-largest economy, after trade data on Thursday raised concerns about the pace of growth.

Meanwhile, investors will parse Yellen’s comments for any indication on the timing of interest-rate increases, with about two-thirds seeing the probability of a quarter-percentage point rate hike at the policy-setting Federal Open Market Committee’s meeting in December. The Fed kept rates unchanged last month as officials opted to wait for further improvement in the labor market, minutes of the meeting showed on Wednesday, though several said the decision had been a close call.

Oil explorers, producers and telecommunication shares led gains, while pharmaceuticals declined on the Topix. Inpex Corp. rose 3.8 percent and Softbank Group Gorp. added 3.3 percent, while clothing maker TSI Holdings Co. declined 1.7 percent.

• Fujitsu Ltd. rose 2.2 percent after the Nikkei newspaper reported the semiconductor manufacturer started an initial bidding round for the sale of its Nifty unit’s household Internet operations as demand for fixed-line broadband slumps.
• Fast Retailing Co. advanced 5 percent after announcing an operating profit growth forecast of 38 percent for the year ending August. Nomura Holdings Inc. slightly lowered its earnings forecast, but said it still expects profit to beat the company’s guidance.
• Hogy Medical Co. sank 6.7 percent after the medical supplies manufacturer said operating profit for the six months ended September fell 6.7 percent from a year earlier.
  
• Tokyo Electron Ltd. and SCREEN Holdings Co., suppliers to Taiwan Semiconductor Manufacturing Co., declined 1.5 percent and 1.6 percent, respectively. The Taiwanese manufacturer gave a 2016 forecast for capital expenditure of slightly above $9.5 billion, at the lower end of earlier guidance.
  

Futures on the S&P 500 Index were little changed. The underlying equity gauge declined 0.3 percent in a volatile session on Thursday amid fresh concern that tepid global growth will weigh on the American economy, just as the Fed prepares to tighten monetary policy.

To contact the reporters on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net, Hideki Sagiike in Tokyo at hsagiike@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Andreea Papuc, Andrew Janes