Bloomberg News

Japan, Australia Stock Futures Fall on U.S. Manufacturing

May 01, 2012

Japanese shares declined, with the Nikkei 225 Stock Average closing at a 10-week low, as the yen strengthened after Spain entered recession and companies from Sharp Corp. to Tokyo Electron Ltd. (8035) missed earnings estimates.

Sony Corp. (6758), Japan’s biggest consumer-electronics exporter, lost 3.9 percent. Sharp, Japan’s largest producer of liquid- crystal displays, plunged 9.3 percent after forecasting a wider- than-estimated loss. Tokyo Electron tumbled 8.3 percent after the chip-equipment maker said profit fell more than expected.

“The worst catalyst is the strengthening yen. Investors can’t get optimistic about the Japanese economy,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, a unit of Japan’s fifth-biggest lender by market value. “The number of companies where earnings are improving as much as investors’ expectations is relatively small.”

The Nikkei 225 fell 1.8 percent to 9,350.95 at the 3 p.m. close in Tokyo, its lowest since Feb. 16. Volume was more than 10 percent lower than the 30-day average. The broader Topix (TPX) Index lost 1.8 percent to 789.49, with more than four times as many shares declining as advancing.

Futures on the Standard & Poor’s 500 Index (SPX) added 0.1 percent today. The gauge lost 0.4 percent in New York yesterday after a report showed U.S. business activity expanded at the slowest pace since November 2009.

Stocks also fell after Spain’s economy entered its second recession since 2009, adding to concern Europe’s debt crisis is worsening. Gross domestic product fell 0.3 percent, the Madrid- based National Statistics Institute said yesterday.

Yen Strengthens

Sony, which gets more than 40 percent of its sales from Europe and the U.S., lost 3.9 percent to 1,265 yen. Nissan Motor Co. (7201), a carmaker that gets almost 80 percent of its revenue overseas, slipped 4.1 percent to 802 yen.

The euro weakened to as low as 105.47 yen today in Tokyo, compared with 106.64 yen at the close of stock trading on April 27. The dollar also depreciated to 79.68 yen today from 80.87 yen, the weakest level since February, cutting the value of some overseas income at Japanese companies when repatriated.

“The yen strengthened above the psychologically important barrier of 80 yen per dollar, which means investors’ hopes that the yen would weaken toward the end of this year were frustrated. Investors need to review their strategies,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

Sharp plunged 9.3 percent to 468 yen, the biggest decline on the Nikkei 225 (NKY), after forecasting a wider-than-expected full- year loss amid slow demand for televisions. The maker of Aquos televisions said after close of market on April 27 it will probably post a loss of 30 billion yen ($376 million) for the year ending March 31, compared with the 7.6 billion-yen average loss forecast of 23 analyst estimates compiled by Bloomberg.

Tokyo Electron Drops

Tokyo Electron tumbled 8.3 percent to 4,085 yen after the world’s second-biggest maker of semiconductor production equipment said net income fell 49 percent to 36.7 billion yen, missing its forecast by 8.2 percent. The company predicted profit will drop 18 percent this fiscal year as sales are hurt by an oversupply of equipment used to make flat-panel displays and solar cells.

In Japan, almost half of the Topix’s 1,672 companies are scheduled to report earnings this and next week. Of the 401 companies that reported results since April 10, 87 have missed estimates while 104 have exceeded expectations, according to data compiled by Bloomberg.

The Topix has fallen about 9.5 percent from this year’s peak on March 27 amid renewed concern about Europe’s debt crisis and signs the U.S. recovery is slowing. Shares on the index trade for an average of 0.9 times book value, compared with 2.2 times for the S&P 500. A number less than one means that companies can be bought for less than value of their assets.

Kikkoman Corp., Japan’s biggest soy sauce maker, gained the most on the Nikkei 225, jumping 4.3 percent to 979 yen after forecasting profit will rise 11 percent to 10 billion yen in the year started April 1. The company also said it will spend as much as 5 billion yen to buy back up to 2.9 percent of its outstanding shares.

-- With assistance from Toshiro Hasegawa in Japan. Editors: Jim Powell

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

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


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