Japan’s earnings surprise analysts to fuel bets for broad rally

Japanese companies posted their largest earnings beat in five years despite soaring oil costs, fueling hopes that strong profit growth across sectors can broaden the market rally beyond AI-related trades. Some 71% of local firms reported profits that exceeded analyst forecasts in the three months ended June, Bloomberg data showed, with aggregate net income at the 500 biggest companies topping ¥21 trillion ($132 billion), eclipsing the previous record of about ¥18 trillion notched a year ago. Profitability also improved sharply, with Topix companies projected to post record margins of 9.3%, the highest level since comparable data began more than three decades ago.