Japanese Stocks Extend Longest Winning Streak Since June 2015

(Bloomberg) -- Tokyo shares advanced for a 12th day to extend their longest winning streak since June 2015 as a rally in bank shares wiped out an earlier loss sparked by a strengthening yen.

The Topix index reversed a drop of as much as 0.5 percent to close at the highest level since the Bank of Japan introduced negative interest rates in January. Bank shares gave the biggest boosts to the Topix as all three Japanese megabanks climbed. Before the June 2015 winning streak, the longest stretch of gains for the Topix was in August 2009.

“We had the market falling for the first time in a while, and there are expectations that the Bank of Japan will buy Japanese stocks,” said Tomoichiro Kubota, a senior analyst at Matsui Securities Co. in Tokyo. Bank shares were declining “so we were already seeing purchases there in the morning, but we’re seeing more buying on dips,” he said.

The BOJ tends to step in on days when stocks fall before the trading break. While the central bank doesn’t say whether it bought exchange traded funds until after the close, investors can tell if it did by looking at off-exchange cross trades. The BOJ seeks to spend 6 trillion yen ($53.5 billion) a year on ETFs that track the Nikkei 225 Stock Average, Topix and JPX-Nikkei Index 400.

“Since we’ve risen so far so quickly, whenever we see falls there are investors who want to buy,” said Tsutomu Yamada, an analyst at Kabu.com Securities Co. in Tokyo. “Bank shares had been making lackluster moves last week when the overall market was rising, but they’re still cheap. Even when they’re sold they don’t fall far, and investors are easily stepping in to buy back.”

Banks led gains on the Topix Monday, with Mizuho Financial Group Inc. advancing 2.1 percent and Mitsubishi UFJ Financial Group Inc. up 1.5 percent. The industry group gauge rose 0.5 percent last week, when the Topix climbed 2.5 percent.

Meanwhile, exporters including electric-appliance makers and car manufacturers were among the biggest drags on the benchmark as the yen strengthened the most against the dollar in three weeks with traders looking ahead to this week’s U.S. jobs report and other economic data that could derail the greenback’s surge. Murata Manufacturing Co. fell 1.2 percent and Suzuki Motor Corp. lost 1.6 percent.

The Bloomberg Dollar Spot Index is pulling back from a decade high before updates on U.S. gross domestic product, personal spending and non-farm payrolls this week.

Oil explorers as a group were the biggest losers on the Topix, with Inpex Corp. sinking 1 percent and Japan Petroleum Exploration Co. declining 2 percent.

The Organization of Petroleum Exporting Countries is embarking on a last-ditch diplomatic push to reach a production cut, with ministers flying to Russia for talks, as Saudi Arabia for the first time suggested the oil club doesn’t necessarily need to curb output. Oil futures fell by as much as 2 percent in New York before erasing losses. Prices dropped 4 percent Friday after Saudi Arabia pulled out of talks scheduled for Monday with non-OPEC producers, including Russia.

Futures on the S&P 500 Index fell 0.2 percent. The underlying equity gauge added 0.4 percent on Friday in light post-Thanksgiving trading as the four major equity indexes reached all-time highs.

--With assistance from Nao Sano 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, Chan Tien Hin