Topix Headed for Three-Week High on Earnings Optimism

Japanese stocks rose, with the Topix (TPX) index headed for its highest level in three weeks, as investors speculated corporate earnings will beat forecasts.

Suzuki Motor Corp. gained 2.4 percent on a report the carmaker's first-half operating income may beat estimates. NTT Urban Development Corp. gained 4.7 percent as developers rose the most among the Topix's 33 industry groups. Jafco Co. jumped 3.4 percent after the investment firm's half-year profit rose about sevenfold from a year earlier.

The Topix climbed 0.4 percent to 1,210.29 as of 12:48 p.m. in Tokyo, poised for its highest close since Sept. 27. All but five of the 33 industry groups advanced. The gauge rose 0.7 percent last week after U.S. lawmakers reached an accord to end the government shutdown and lift the debt ceiling. The Nikkei 225 Stock Average added 0.7 percent to 14,665.14. The yen slipped 0.3 percent to trade at 97.97 against the dollar.

"The market focus is shifting to reporting season after the U.S. avoided default," said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan's third-largest bank by market value. "I think there's optimism about corporate earnings. Companies that haven't fully priced in a weaker yen have room to raise their profit forecasts."

While leading gains among developed markets this year, the Topix added just 1 percent this month through Oct. 18 after Prime Minister Shinzo Abe decided to push ahead with a sales tax increase and the U.S. shut down parts of its government. Some 590 companies on the 1,744-member gauge are scheduled to report results through Oct. 31, with earnings season peaking next week.

Earnings per share for companies on the Topix are expected to grow 56 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

Trade Data

Japan's exports grew 11.5 percent in September from a year earlier, the Finance Ministry said today, less than the revised 14.6 percent gain in August and below the 15.6 percent median forecast of economists surveyed by Bloomberg News. Imports climbed 16.5 percent, leaving a trade deficit of 932.1 billion yen ($9.5 billion).

Separately, Bank of Japan Governor Haruhiko Kuroda said Japan's economy is moving smoothly to achieve a 2 percent inflation target. He spoke today at the bank's branch-manager meeting.

Futures on the Standard & Poor's 500 Index gained 0.1 percent today. The measure rose 0.7 percent on Oct. 18 as results from Google Inc. topped estimates and speculation grew that the Federal Reserve will delay cutting the pace of bond purchases.

Fed Stimulus

The September U.S. jobs report, originally scheduled to be released Oct. 4, will be issued tomorrow after being delayed by the partial government shutdown. October employment figures will come out on Nov. 8, rather than Nov. 1. Delayed economic data will prevent Federal Reserve policy makers from paring asset buying until their March 18-19 meeting, according to the median of 40 responses by economists in a survey conducted by Bloomberg last week.

The Topix traded at 1.26 times book value as of Oct. 18, compared with 2.56 for the S&P 500 and 1.79 for the Stoxx Europe 600 Index. Its 30-day historic volatility was at 16.07 on Oct. 18, compared with its five-year median of 19.29.