Bloomberg News

Nikkei Slips From Seven-Month High as Oil Prices Weigh on Energy Companies

March 05, 2012

The Nikkei 225 Stock Average (NKY) retreated from a seven-month high as a strengthening yen clouded the earnings outlook for exporters to Europe and falling oil prices weighed on energy companies.

Shares also slipped after Chinese Premier Wen Jiabao said mainland policy makers are targeting the slowest economic growth this year since 2004. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, sank 3.3 percent. Inpex Corp. (1605), the country’s top energy explorer by market value, dropped 2.1 percent. JFE Holdings Inc. led steelmakers lower after a gauge that tracks makers of the material jumped 19 percent last month.

“Japanese stocks have had a strong rally and technical indicators suggest some overheating,” said Yumi Nishimura, analyst at Daiwa Securities Group Inc. “Sectors that have been performing strongly are slipping back a little, while investors are buying defensive shares that have gained a little less.”

The Nikkei 225 fell 0.8 percent to 9,698.59 at the 3 p.m. close in Tokyo, declining after the gauge rose last week to its highest level since Aug. 2. The broader Topix (TPX) lost 0.6 percent to 832.86 today. The 25-day Toraku, which tracks the ratio of winners to losers on the Tokyo Stock Exchange, held for a 15th day above 120, a level indicating to traders the market may fall.

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.2 percent today. The measure fell 0.3 percent in New York on March 2 amid concern the U.S. economic outlook may not warrant the gauge’s advance last week to its highest level since 2008.

‘Insufficient Evidence’

Kyocera Corp. (6971) and Nidec Corp. dropped after the U.S. Public Company Accounting Oversight Board said the companies’ auditor had issued reports without “sufficient competent evidential matter.” Kyoto Audit Corp. failed to sufficiently test whether sales figures were accurate or whether unsold products were worth what the books said, according to the watchdog.

Kyocera, a Kyoto-based maker of mobile phones and electronic equipment, fell 2.7 percent to 7,130 yen. Nidec, the world’s biggest maker of motors for hard-disk drives, lost 2.3 percent to 7,350 yen.

The Topix (TPX) has risen 5.9 percent in the three weeks since Feb. 14, when the Bank of Japan surprised investors by increasing its bond purchases. The move helped drive the yen down last week to its lowest against the dollar since May 25.

Exporters including Sony dropped after Japan’s currency appreciated against all its major peers today, rising to as high as 107.21 against the euro in Tokyo, compared with 108.32 at the close of stock trading on March 2. A stronger yen erodes the value of repatriated income for Japanese exporters.

Sony, Honda Drop

The European Union this week faces a test in its attempt to turn the page on the two-year debt crisis when Greece’s private creditors decide whether to sign off on the biggest sovereign- debt restructuring in history.

Sony slumped 3.3 percent to 1,691 yen. Honda Motor Co. (7267) lost 1.3 percent to 3,050 yen. Shares of Japan’s third-largest automaker have advanced 30 percent since Dec. 30 as the yen weakened and U.S. car sales rose above 14 million units in consecutive months for the first time since 2008.

Steelmakers and shipping lines declined the most among the 33 Topix industry groups today, retreating after gauges tracking the sectors rose about 20 percent last month.

JFE, Japan’s second biggest steelmaker, slumped 3.8 percent to 1,642 yen. Nippon Yusen K.K., Japan’s biggest shipping line, fell 2.9 percent.

‘Lock In Profits’

“Investors are looking to lock in profits,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees the equivalent of $68 billion.

China will target economic growth of 7.5 percent this year, the lowest since 2004, cutting the 8 percent goal held from 2005 to 2011, Wen said in Beijing today. China is the world’s second- largest economy and Japan’s top export market.

Energy companies fell as oil declined the most this year after President Barack Obama asked Israel to refrain from “loose talk of war” in confronting Iran’s nuclear program. Obama and Israeli Prime Minister Benjamin Netanyahu meet today at the White House to discuss stopping Iran’s nuclear program.

Inpex slid 2.1 percent to 561,000 yen. Smaller Japan Petroleum Exploration Co. (1662) lost 1.5 percent to 3,870 yen.

The following were among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Fast Retailing Co. (9983) (9983 JT), Japan’s biggest clothing seller, gained 1.4 percent to 17,080 yen after saying sales at domestic stores open at least a year gained 1.2 percent in February, rising for a third consecutive month.

NTT DoCoMo Inc. (9437) (9437 JT), Japan’s biggest mobile phone carrier, rose 1.6 percent to 141,500 yen. The company will form a venture fund this year with Telefonica SA to develop its smartphone-related technologies and services in South America, the Nikkei newspaper reported. The fund size may be between 7 billion yen and 8 billion yen, it said.

Olympus Corp. (7733) (7733 JT) retreated 5.5 percent to 1,256 yen. The Tokyo District Public Prosecutor’s Office will arrest former executives including ex-chairman Tsuyoshi Kikukawa for misrepresentating the camera maker’s securities report, the Mainichi newspaper reported, without saying where it obtained the information.

Sanyo Housing Nagoya Co. (8904 JT), a home design company, sank 5.7 percent to 73,400 yen. The company plans to raise as much as 1.05 billion yen ($13 million) in a public share sale, according to a filing with the Finance Ministry.

Wakita & Co. (8125) (8125 JO), a manufacturing and trading firm, tumbled 8.4 percent to 548 yen. The company plans to raise up to 3.3 billion yen in a sale of treasury shares, according to a filing with the Finance Ministry.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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