Bloomberg News

Japanese Stocks Drop as U.S. Growth Concern Hits Sony, Toyota

October 03, 2011

Oct. 3 (Bloomberg) -- Japanese stocks fell, with the Nikkei 225 Stock Average dropping the most in a week, after U.S. consumer spending slowed and incomes unexpectedly declined in the world’s biggest economy, damping the earnings outlook for Asia’s exporters.

Sony Corp., Japan’s biggest exporter of consumer electronics, plunged 4.5 percent. Toyota Motor Corp., which counts North America as its largest market, slipped 2 percent. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender by market value, fell 2.8 percent. Mitsubishi Corp., the country’s top trading company, lost .4.8 percent after oil and metal prices slumped.

The Nikkei 225 Stock Average fell 1.8 percent to 8,545.48 at the 3 p.m. close of trading in Tokyo. The measure tumbled 11 percent last quarter, its worst performance since the three months ended June 2010, amid concern the U.S. economy is slowing and Europe’s debt crisis will spill over into the banking system. The Topix lost 1.9 percent to 747.11 today.

“Sentiment has gotten so bad that investors easily respond to any sort of negative news,” said Ayako Sera, a market strategist in Tokyo at Sumitomo Trust & Banking Co., which manages the equivalent of $323 billion. “There’s concern that overseas demand will shrink. So stocks sensitive to the global economy are declining.”

S&P Futures

Futures on the Standard & Poor’s 500 Index fell 0.9 percent today. The index fell 2.5 percent on Sept. 30 in New York, sending the measure to its biggest quarterly drop since 2008, after reports from China and Germany fueled concern the global economy is slowing.

Consumer spending in the U.S. slowed in August as incomes unexpectedly dropped for the first time in almost two years. Purchases rose 0.2 percent after a 0.7 percent increase in July, Commerce Department figures showed on Sept. 30. Economists had forecast incomes would rise 0.1 percent, according to a Bloomberg survey.

Sony, which fell to its lowest intraday level since 1987 today, finished down 4.5 percent at 1,439 yen. Toyota, the world’s biggest carmaker, fell 2 percent to 2,635 yen. Mitsubishi UFJ Financial lost 2.8 percent to 344 yen.

Japanese stocks fell even after the Bank of Japan’s quarterly Tankan index of sentiment at large manufacturers rose to 2 in September from minus 9 in June, matching the median estimate of 23 economists surveyed by Bloomberg News. A positive number means optimists outnumber pessimists.

Eyes on America

“The Tankan results were in-line with expectations, so it’s not really affecting stocks,” said Sumitomo Trust’s Sera. “Stocks are reacting more to what happened in America.”

Japanese trading companies extended last week’s declines after the prices of oil and metals dropped further. The Topix Wholesale Trade Index lost 4.5 percent after tumbling 3.4 percent last week.

Mitsubishi Corp., which gets about 43 percent of its revenue from commodities, lost 4.8 percent to 1,516 yen. Smaller Mitsui & Co. slumped 5.3 percent to 1,074 yen. Inpex Corp., Japan’s No. 1 energy explorer, dropped 2.4 percent to 472,500 yen.

Oil fell today from a one year-low in New York, extending declines after the worst quarter since 2008. Crude for November slid as much as 1.6 percent in electronic trading in New York. Prices on the London Metal Exchange fell 3.4 percent on Sept. 30.

Shipping Companies Fall

Mitsui O.S.K. Lines Ltd. led shipping companies lower after reporting that profit fell. Japan’s second-biggest shipper fell 7 percent to 279 yen, its lowest close since March 2003. The company lost 17 billion yen in the six months ended Sept. 30, missing a profit forecast of 1 billion yen, according to a preliminary earnings statement that cited a decline in freight rates and a stronger yen.

Sumitomo Electric Industries Ltd., one of the world’s biggest makers of wire harnesses, plunged after smaller Furukawa Electric Co. last week agreed to plead guilty and pay a $200 million U.S. fine for a price-fixing and bid-rigging conspiracy involving the sale of parts to automakers.

Sumitomo Electric plunged 11 percent to 809 yen, the biggest drop on the Topix index. Furukawa, which was cut to “neutral” from “overweight” by JPMorgan Chase & Co., lost 7 percent to 198 yen.

--Editors: Jason Clenfield, Jim Powell.

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 editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.


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