Japanese stocks fell for a third day, capping a six-week loss, as China’s inflation and factory output data added to signs of an economic slowdown, dimming the earnings outlook for exporters.
Hitachi Construction Machinery Co. (6305), which relies on China for 17 percent of its sales, lost 1.1 percent. Sony Corp. fell to its lowest in more than 31 years after the electronics maker forecast profit that lagged estimates. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, paced declines among banks after JPMorgan Chase & Co. (JPM:US) reported a $2 billion trading loss.
The Nikkei 225 Stock Average (NKY) fell 0.6 percent to 8,953.31 at the 3 p.m. close in Tokyo after swinging between gains and losses at least seven times. The measure lost 4.6 percent this week as part of the longest streak of weekly losses since July 2008. The broader Topix Index fell 0.9 percent to 758.38, with more than seven stocks dropping for each that rose.
“The market is struggling to digest negative factors coming in one after another,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., Japan’s fifth-largest lender by market value. “China’s economy doesn’t look good, judging from reports. There are strong expectations for quick monetary easing, but they can’t loosen regulations on real estate.”
The Nikkei 225 has retreated 13 percent from this year’s high on March 27 amid concern resistance to austerity measures will worsen Europe’s debt crisis and that China will refrain from further easing to spur growth.
China Inflation, Output
Stocks fell after China’s consumer prices rose 3.4 percent in April from a year earlier after a 3.6 percent gain in March, the government reported today. China’s industrial output rose 9.3 percent in April from a year earlier while retail sales gained 14.1 percent, with both figures missing analyst estimates, the government also reported today.
Hitachi Construction fell 1.1 percent to 1,554 yen. Taiyo Yuden Co., a maker of electronic components that gets 27 percent of its revenue, in China, dropped 2.2 percent to 757 yen.
Weaker earnings forecasts also drove down shares, with Sony slumping 6.4 percent to 1,136 yen, the lowest close since August 1980. The company said it expects 30 billion yen ($376 million) in net income in the year started April 1, its first profit in five years. The projection fell short of the 61.4 billion-yen estimate of 18 analyst estimates compiled by Bloomberg.
Futures on the Standard & Poor’s 500 Index fell 0.8 percent today after JPMorgan, the biggest U.S. bank by assets, said it had a $2 billion trading loss as positions in credit securities proved riskier than expected. The index gained 0.3 percent yesterday on a report that unemployment claims last week fell to their lowest in a month, easing concern the U.S. labor market is faltering.
Lenders were the biggest drag on the Topix today. Mitsubishi UFJ slid 1.7 percent to 351 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, dropped 2 percent to 2,355 yen.
Stocks earlier rose after the mandate to form a Greek government passed to Evangelos Venizelos, the socialist Pasok leader, who is pressing for a unity coalition. The political standoff has reignited concern that Greece will fail to meet bailout terms and force an exit from the monetary union.
“Greece is unlikely to choose to exit the euro or reject a bailout,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about $23.8 billion. “Japanese companies have reported conservative but solid earnings and remain on the path toward higher profits. The more selling we see due to risk aversion, the more we realize stocks are cheap.”
Among advancing shares, Nikon Corp. jumped 8.6 percent to 2,474 yen. The camera maker forecast full-year net income of 65 billion yen, beating analysts’ estimates of 62.7 billion yen.
Stocks on the Topix are valued at 0.92 times book value, compared with 2.15 for the S&P 500 and 1.38 for the Stoxx Europe 600 Index. A value less than one means investors can buy companies for less than the value of their assets.
Trading volume on the Nikkei 225 was 11 percent above the 30-day average. The Nikkei 225 Volatility Index (VNKY) gained 3.8 percent to 22.71, indicating traders expect a swing of 6.5 percent on the benchmark gauge over the next 30 days.
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