Bloomberg News

Japanese Stocks Decline on U.S. Housing, Employment Data

June 22, 2012

Japanese stocks fell snapped a two- day rally as U.S. housing and jobs data missed estimates, stoking concern the global economy is slowing. Shares pared losses as the yen’s drop to a five-week low against the dollar lifted exporters’ outlook.

Canon Inc. (7751), a camera maker that gets 27 percent of its revenue in the Americas, lost 0.8 percent. Mitsui & Co. (8031) led trading companies lower as commodities entered a bear market. Mitsubishi UFJ Financial Group Inc. (8306) lost 1.1 percent after 15 global banks were downgraded by Moody’s Investors Service. Olympus Corp. (7733) gained 2.2 percent on a report Sony Corp. (6758) is in final talks to invest in the scandal-hit optics maker.

The Nikkei 225 Stock Average (NKY) fell 0.3 percent to 8,798.35 at the 3 p.m. close of trading in Tokyo, trimming earlier losses of as much as 1 percent. The gauge added 2.7 percent this week, capping a third weekly advance. The broader Topix Index dropped 0.4 percent to 750.92 today.

“All the data yesterday pointed to a slowdown, and we can’t expect immediate stimulus measures,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about $62 billion. “Japanese stocks are falling, but they remain resilient because of the yen. The currency is the biggest barometer for Japan’s corporate outlook.”

The Topix fell 14 percent from this year’s peak on March 27 amid concern policy measures won’t be enough to support a global economy hindered by Europe’s debt crisis and a slowdown in China and U.S. Shares on the index are valued at 0.89 times book value. A number below one means a company can be bought for less than the value of its assets.

U.S. Data

Futures on the Standard & Poor’s 500 Index advanced 0.3 percent today after bank credit downgrades announced by Moody’s Investors Service matched expectations. The gauge fell 2.2 percent yesterday after reports showed more Americans than expected filed claims for jobless benefits and sales of existing homes fell. Stocks also fell after a survey yesterday showed manufacturing in China may have contracted for an eighth month.

Canon lost 0.8 percent to 3,250 yen. Otsuka Holdings Co., a drugmaker that gets a third of its sales in the U.S., slid 0.2 percent to 2,371 yen.

Finance stocks retreated after Moody’s downgraded some of the world’s biggest lenders, although no Japanese banks’ ratings were cut. Mitsubishi UFJ lost 1.1 percent to 368 yen, and Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, dropped 1 percent to 2,513 yen.

The Federal Reserve on June 20 cut its U.S. growth forecast and said it will extend a program called Operation Twist to replace short-term bonds with longer-term debt.

Yen Falls

The yen weakened to a one-month low against the dollar as the yield premium of two-year U.S. Treasury notes over comparable Japanese government debt widened. A weaker yen boosts the value of exporters’ earnings when brought back home. The MSCI Asia Pacific excluding Japan Index fell 1.4 percent.

“Employment and housing sectors remain sluggish in the U.S. economy, boosting the need to counter a slowdown with monetary policy,” saidTomoichiro Kubota, a market analyst at Matsui Securities Co. “The yen has stabilized, providing a floor for Japan’s stocks.”

Honda Motor Co. (7267), Japan’s second-largest carmaker by market value, rose 0.8 percent to 2,686 yen. Nissan Motor Co., Japan’s third-largest carmaker by market value, slid 1.8 percent to 748 yen after saying Chief Executive Officer Carlos Ghosn is considering stepping down before the company’s next mid-term business plan begins in about five years.

Traders and energy firms fell after the S&P GSCI commodities gauge slid to the lowest level since 2010 and down 22 percent from a February peak, meeting the definition of entering a bear market. Oil fell below $80 a barrel for the first time in eight months.

Commodity Stocks

Mitsui dropped 1.2 percent to 1,159 yen. Inpex Corp. (1662), Japan’s No. 1 energy explorer, declined 2.5 percent to 452,500 yen. Japan Petroleum Exploration Co. slid 3.2 percent to 3,005 yen.

Bridgestone Corp., the world’s biggest maker of tires, lost 1.2 percent to 1,755 yen after saying it may extend output cuts in the second half due to slumping demand.

Among stocks that advanced, Olympus added 2.2 percent to 1,196 yen after the Nikkei newspaper reported Sony may invest about 50 billion yen for a 10 percent stake. Sony rose 5.6 percent to 1,163 yen.

The Nikkei 225 Volatility Index (VNKY) fell 0.8 percent to 20.75, the lowest since May 2, indicating traders expect a swing of about 5.9 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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