Japan Indexes Extended 2-Day Rally; IHI Soared 20%, Mecari Plunged 16%

Akira Ito
06 Nov, 2024
Tokyo

Stock market indexes in Tokyo advanced for the second day in a row as investors attempted to decipher possible impacts of Donald Trump's win in the U.S. presidential election. 

The Nikkei 225 stock average soared 2.6% and the broader Topix index added 1.9% as investors reviewed the sentiment index among large businesses. 

Donald Trump's administration is likely to impose higher tariffs on goods imported from Asia and China and also raise trade barriers that could negatively impact Japanese corporations. 

Moreover, Japanese politicians may face demand from the Trump administration to bear a larger financial burden of security arrangements to defend the nation from aggression from China, Russia, or North Korea. 

On the economic front, the Reuters Tankan sentiment index for Japan's manufacturers eased to +5 in November from +7 in October. 

The sentiment weakened amid growing worries over the economic slowdown in China and rising domestic inflationary pressures. 

Japan's service sector activity index was revised higher in October, indicating that the contraction was less severe than previously estimated. 

Services PMI was revised to 49.7 in October from the preliminary estimate of 49.3, and the index declined for the first time since June amid renewed pressures on export orders. 

The Bank of Japan's latest policy meeting minutes showed that most committee members were in agreement in continuing to raise rates, and inflation and economic conditions align with the central bank's goals. 

However, most members preferred to raise rates gradually according to the minutes of the September 19-20 monetary policy meeting. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average jumped 2.6% to 39,480.67, and the broader Topix index added 1.9% to 2,715.92. 

Mercari Inc. plunged 16% to ¥1,824.0 after the e-commerce company reported weaker-than-expected quarterly results. 

Revenue in the September quarter increased 1.5% to 44.9 billion yen from 44.3 billion yen, net income rose 7.9% to 3.04 billion yen from 2.8 billion yen, and diluted earnings per share rose to 17.44 yen from 16.54 a year ago. 

The company estimated revenue in the fiscal year 2025 ending in June between 200 billion and 210 billion yen, an increase between 6.7% and 12.1%.

The company guided annual core operating profit between 22 billion and 25 billion yen, an increase between 16.6% and 32.5%. 

IHI Corp. soared 19.1% to ¥9,280.0 after the heavy-duty engineering company reported its financial results and raised its dividend and profit outlook for the current year. 

Consolidated revenue in the six months ended September rose 61.1% to 757.5 billion yen from 470.31 billion yen, net income swung to a profit of 40.9 billion from a loss of 135.6 billion yen, and diluted earnings per share were 259.69 yen compared to a loss of 909.25 yen. 

The company estimated full-year revenue to increase 21% to 1.6 trillion yen, profit attributable to shareholders to rise to 85 billion yen, and basic earnings per share of 559.55 yen. 

The company estimated the full-year dividend to increase to 120 yen from 100 yen in the previous year.