Japanese stocks posted their highest close in two weeks on Thursday as a Federal Reserve interest rate cut, surprisingly brisk US economic growth data and a softer yen boosted exporters including Canon Inc. Nippon Oil Corp and other energy-related issues also fuelled the market's rise after oil leapt nearly 2 percent to top $96 for the first time on an unexpectedly sharp fall in US crude stocks.
Another notable stock was GCA Holdings Corp The mergers and acquisitions advisory firm rocketed 11.3 percent higher to 661,000 yen after it said it would buy US peer Savvian LLC in a stock swap deal worth $780 million, seeking a bigger slice of growing cross-border deals.
While generally solid earnings results underpinned gains in the market, investors heavily punished companies that had reported disappointing earnings such as NTT Data Corp Masaki Iso, chief investment officer at Yasuda Asset Management Co Ltd, said he initially thought markets might fall as the Fed rate cut was smaller than some participants had hoped.
"The scenario has changed, however. We saw economic data that indicated the US economy is not immediately deteriorating," he said, referring to data showing Asia's top export market grew at a surprisingly brisk 3.9 percent annual rate in the third quarter.
On Wednesday, the Fed lowered the key overnight federal funds rate by a quarter percentage point to 4.5 percent, as expected, following on from its 50 basis point cut in September. "But should the economy not be deteriorating, there's a chance the Fed may stop pouring money into the stock market earlier than expected, and that would be negative for stocks," Iso said.
The benchmark Nikkei average rose 0.8 percent or 132.77 points to end at 16,870.40, the highest finish since October 18. The broader TOPIX index climbed 1 percent or 15.71 points to 1,635.78, its highest close since October 15. The dollar dipped to 115.30 yen but stayed well above a six-week low of 113.25 yen struck last week.
Kenichi Hirano, operating officer at Tachibana Securities, said he would not be surprised if the market softened after Thursday's session. "The US market could still become mixed with financial policy set at neutral again after the rate cut, and Japanese stocks can't keep going higher either," Hirano said.
Trade was moderate, with 2.1 billion shares changing hands on the Tokyo exchange's first section, compared with last month's daily average of 1.9 billion. Advancing stocks outnumbered declining ones by a ratio of nearly two to one. A projected rise in full-year recurring profit forecasts by 310 companies that reported by Wednesday stood at 6.7 percent, data from Shinko Research Institute showed, topping the expected 4.1 percent. First-half profits were up 9.8 percent, above the forecast 3 percent rise.