Bloomberg News

Japanese Stock Drop as Europe Debt Crisis Concern Flares

April 09, 2012

Japanese shares fell for a fifth day, sending the Nikkei 225 Stock Average to its longest losing streak since November, as U.S. employers added fewer jobs than expected, damping the outlook for recovery in the world’s biggest economy and hurting the earnings prospects for exporters.

Honda Motor Co. (7267), a carmaker that earns more than half of its sales from North America and Europe, slipped 2.4 percent after the yen strengthened. Hitachi Construction Machinery Co., which counts China as its biggest market, lost 2.3 percent after mainland inflation accelerated more than forecast in March, damping expectations of further easing. Takashimaya Co. fell 2.6 percent after the retailer’s president said the department store market will contract, according to a Nikkei newspaper report.

“The job data reduced investors’ optimism,” said Naoki Fujiwara, who helps oversee $6.4 billion at Shinkin Asset Management Co. in Tokyo. “People in the markets are getting more cautious and the mood is growing that the U.S. economy won’t recover so easily.”

The Nikkei 225 (NKY) fell 1.5 percent to 9,546.26 at the 3 p.m. close in Tokyo. Volume on the gauge was about 30 percent lower than the 30-day average. The broader Topix Index lost 1.5 percent to 813.69, with five times as many shares declining as advancing. All 33 industry groups on the gauge declined.

Futures on the Standard & Poor’s 500 Index (SPXL1) slipped 1 percent today after the Labor Department said on April 6 that U.S. employers added 120,000 jobs in March, the lowest number in five months. The data also showed the unemployment rate fell to 8.2 percent as people left the labor force. Markets in the U.S. were closed April 6 for the Easter holiday.

Yen Strengthens

Stocks fell as the yen appreciated to as high as 81.20 against the dollar today in Tokyo, compared with 82.27 at the close of stock trading on April 6. Japan’s currency strengthened to 106.18 from 107.55 against the euro. A stronger yen cuts the value of some overseas income for Japanese companies.

Honda, Japan’s second-biggest carmaker by market value, slipped 2.4 percent to 2,937 yen. Canon Inc. (7751), a camera maker that gets about 80 percent of its revenue overseas, retreated 1.7 percent to 3,780 yen.

A strengthening yen puts more pressure on the Bank of Japan to do more to stimulate the economy. Governor Masaaki Shirakawa said the bank’s asset-purchase program may be extended on April 27 when inflation data becomes available, according to Morgan Stanley MUFG Securities Co. The central bank concludes a two-day meeting on interest rate policy tomorrow.

“The situation is chaotic because we don’t know what conditions could trigger additional easing,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd.

Exporters to China

Shares linked to China also declined as faster-than- estimated inflation reduced the scope for the government to ease monetary policy to spur growth. Consumer prices rose 3.6 percent from a year earlier after gaining 3.2 percent in February, the National Bureau of Statistics said on its website today. That was more than the economists’ estimates of 3.4 percent.

Hitachi Construction (6305) retreated 2.3 percent to 1,707 yen. Komatsu Ltd., an excavator maker that counts China as its biggest market, lost 2 percent to 2,296 yen. TDK Corp., a manufacturer of electronic parts which gets almost a third of its revenue from China, fell 1.7 percent to 4,365 yen.

Takashimaya slumped 2.6 percent to 636 yen, its biggest drop since Dec. 27, after President Koji Suzuki said the domestic department store market “will lose 1 trillion yen in sales over the next five years and shrink to 5.2 trillion yen by 2016,” according to a Nikkei report.

Nachi-Fujikoshi Corp. (6474) tumbled 3.4 percent to 431 yen after the bearing maker said net income fell 40 percent to 1.37 billion yen ($17 million) in the quarter ended Feb. 29. It said earnings were hurt by the stronger yen, higher raw materials costs and expenses from overseas business expansion.

Sony Rallies

Among stocks that gained, Sony Corp. (6758) rallied 0.6 percent to 1,644 yen. Japan’s biggest consumer-electronics exporter erased earlier losses of as much as 3 percent after the Nikkei reported that the company will cut 10,000 jobs worldwide.

The value of shares traded on the first section of the Tokyo Stock Exchange totaled 964.3 billion yen, the lowest level since Jan. 30, amid market closures today in Australia, New Zealand and Hong Kong today for national holidays.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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


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