Japanese Share Prices Climb to Four-Year High

Japan’s stock market jumped to a fresh four-year high on Wednesday amid improved prospects for Japanese exporters and rising optimism about the nation’s economy in general.

Japan’s market has been one of the strongest this year among those of developed nations as investors bet that the long-troubled economy is on a sustainable recovery path.

The Nikkei-225 index rose 79.10 points, or 0.6%, to 14,170.87, its highest closing level since May 21, 2001.

The index has surged 23% this year in yen terms. By contrast, measured in their native currencies, the blue-chip U.S. Standard & Poor’s 500 index is up 1.6% and a Bloomberg index of 500 major European stocks is up 16%.

Shares of exporters such as Toyota Motor Corp. led the gains Wednesday. The dollar’s sharp appreciation against the yen since September means dollars earned by Japanese exporters translate into more yen when they are brought home.

“The yen’s weakness will benefit earnings at exporters, so that’s one of the reasons we’ve seen a rotation into their shares,” said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments in Tokyo.

The dollar hit a two-year high of 119.05 yen in New York on Wednesday, up from 118.82 on Tuesday and 109 in September. The dollar has been boosted by the strong U.S. economy and rising U.S. interest rates.

Stronger domestic spending also is underpinning Japanese stocks. Japan’s economy grew at an annualized 1.7% in the three months ended Sept. 30 as companies and consumers spent more, the government said last week. That beat the 1.1% median estimate of 31 economists in a survey.

For U.S. investors in Japanese stocks, the robust dollar has hurt returns this year. Measured in dollars, the Nikkei is up about 7%. Still, that is more than four times the gain of the S&P; 500.