Japanese Shares Gain Most in Four Weeks on Bank Earnings Boost

(Bloomberg) -- Japan’s Topix index gained the most in four weeks, bouncing back after a two-day tumble, as banks rose following positive earnings reports.

Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. were among the biggest boosts to the benchmark gauge after both reported higher profits, even as lending income fell. Mitsubishi UFJ Financial Group Inc., which is scheduled to announce results on Friday, also climbed.

“The megabanks’ quarterly earnings showed that the progress rate on their full-year profit goals was high, and the recent rise in U.S. Treasury yields has fueled optimism that their margins will improve,” said Masayuki Otani, chief market strategist at Securities Japan Inc. in Tokyo.

Japanese Shares Gain Most in Four Weeks on Bank Earnings Boost

Shares in Tokyo rose for the first time in three days, following a similar rebound in U.S. peers after the Federal Reserve signaled optimism in the U.S. economy and paved the way for an interest rate increase in March. The yield on the 10-year U.S. note rose to as much as 2.75 percent Wednesday, the highest since April 2014.

While leaving rates unchanged, the U.S. central bank included two references to the word “further” in connection with its outlook for additional gradual hikes in its statement, which economists said was designed to underscore that rates were headed higher.

“The FOMC naturally signaled a rate increase in March and showed confidence on the U.S. economy,” said Juichi Wako, a strategist at Nomura Securities Co. in Tokyo. “The Fed will implement monetary policy in a way that’d serve as a weaker accelerator rather than a brake, so the good environment for the stock market will likely continue.”

Summary

  • Topix +1.8% to close at 1,870.44 in Tokyo, biggest gain since Jan. 4
  • Nikkei 225 +1.7% to 23,486.11; first advance in 7 days
  • Yen -0.2% to 109.35 per dollar; weakened 0.4% Wednesday
  • Banks biggest Topix boost: MUFG +4.4%, SMFG +4.4%, Mizuho +2.2%
  • Fujifilm +12%; rebounds from late Wednesday slide after announcing deal to merge Xerox and Fuji Xerox
  • Start Today +9.5%; upgraded to neutral from underweight at Cantor Fitzgerald
  • Hino Motors +8%; lifts full-year operating-profit forecast 4% to 78b yen
  • Shimadzu +6.6%; announces new blood test to identify individuals at risk of developing Alzheimer’s
  • Shinsei Bank -3.7%; 9-month net income -18% y/y to 35.6b yen; says may receive reassessment notice from tax bureau
  • Fujitsu -13%; 3Q operating profit 10.5b yen vs analyst est. 37.1b yen; cut to neutral from outperform at Macquarie

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