Tuesday, 24 February 2015

Topix Little Changed as Rail Companies Drop, SoftBank Rallies

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by Anna Kitanaka Toshiro Hasegawa  |  4:03 PM PST  |  February 24, 2015

(Bloomberg) -- Japan’s Topix index closed little changed, with rail companies weighing on the gauge and SoftBank Corp. providing the biggest boost, as investors assessed comments by Federal Reserve Chair Janet Yellen on U.S. interest rates.

Central Japan Railway Co. slid 3.7 percent after rallying for nine straight days through Monday to a record high. SoftBank gained 3 percent, its biggest advance in almost a month. Fast Retailing Co., Asia’s biggest clothing chain, was one of more than 100 Topix stocks to trade without the right to its next dividend, weighing on the gauge. Pachinko slot machine maker Sankyo Co. sank 6.2 percent after cutting its profit forecast.

The Topix closed little changed at 1,507.62 in Tokyo, swinging between gains of as much as 0.3 percent and a loss of 0.2 percent. The gauge had risen for the past seven days. The Nikkei 225 Stock Average slipped 0.1 percent to 18,585.20 after closing yesterday at a 15-year high. The yen rose 0.3 percent to 118.67 per dollar.

“The market looks overbought in the short-term and so we’ll be seeing some profit taking,” Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo, said by phone. “We’re getting a sense of security from expectations of a delay in U.S. rate hikes.”

Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent. The underlying gauge rose 0.3 percent to a record in New York on Tuesday after Yellen’s testimony to Congress.

Yellen told the Senate Banking Committee that wage growth remains too low even as the job market improves, and she signaled that a change in the Fed’s guidance on interest rates won’t lock it into a timetable for tightening.
Fed ‘Patient’

She repeated that the Fed’s pledge to be “patient” on beginning to raise the benchmark interest rate means an increase is unlikely for “at least the next couple” of meetings.

“The market was fearing a rate hike in June, but there’s more confidence now after the Chair’s reference to inflation that the hike will be delayed,” said SMBC’s Nishi.

SoftBank gained 3 percent to 7,315 yen, the biggest boost to the Topix and the Nikkei 225.

NTT Data Corp. added 2 percent to 4,870 yen after JPMorgan Chase & Co. raised its rating on the stock to overweight from underweight, while boosting its target share price by 58 percent to 5,700 yen.

About 105 companies on the Topix went ex-dividend Wednesday, according to data compiled by Bloomberg, meaning investors lose their right to the next payout. Fast Retailing slid 0.5 percent to 44,905 yen, after adjusting for the impact of its dividend.

Sankyo dropped 6.2 percent to 4,505 yen, its biggest decline in a year. The company cut its net-income forecast for the year by 42 percent on slowing sales.
Railways Drag

The Topix Land Transportation Index sank 1.5 percent, the biggest drag among the 33 industry groups on the broader gauge. Central Japan Railway lost 3.7 percent to 22,195 yen, leading declines on the sub-index.

Euro-zone finance ministers approved a four-month bailout extension for Greece on Tuesday after the government pledged to revamp tax collection, consolidate pension funds and maintain sales of state-owned assets. The accord paves the way for the European Central Bank to continue support of Greek lenders, while buying time for the euro area’s most indebted state to convince creditors it will deliver.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey