Japanese Stocks Swing Between Gains, Losses on U.S. Consumer Confidence

Japanese stocks swung between gains and losses, sending the Nikkei 225 (NKY) Stock Average to the biggest monthly drop in a year, after lower U.S. consumer confidence stoked speculation the Federal Reserve will take further steps to stimulate growth.

Honda Motor Co., a carmaker that gets more than 80 percent of its revenue abroad, rose 1.5 percent, giving the biggest support for the Topix index. Nintendo Co., the world’s largest maker of video-game players, rose 3.9 percent after SMBC Nikko Securities Inc. raised its rating on the company. Taiheiyo Cement Corp. (5233), a cement maker, plunged 15 percent after saying it plans to sell shares to the public.

The Nikkei 225 Stock Average was little changed at 8,955.20 as of the 3 p.m. trading close in Tokyo after falling as much as 0.5 percent. The broader Topix index rose 0.4 percent to 770.60, after declining as much as 0.4 percent. For the month, the Nikkei has fallen 8.9 percent, the biggest monthly loss since May 2010, while the Topix is down 8.4 percent.

“The market has priced in most of the negative factors, and now it depends on the response from policy makers,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “While the market won’t go down easily, to go up it needs a view that appropriate policies will be implemented.”

The Topix has lost about 14 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.9 times book value, the lowest since March 2009.

U.S. Futures

Futures on the Standard & Poor’s 500 Index climbed 0.3 percent today. In New York, the index rose 0.2 percent yesterday after minutes of the Fed’s meeting this month showed some policy makers favored more aggressive action to stimulate the economy and lower unemployment.

The minutes indicate that Fed officials will more fully debate their options when they meet next month for a two-day meeting that was originally scheduled to last one day. Fed officials at the August meeting discussed a range of tools, including buying more government bonds, to bolster the economy.

Exporters to the U.S. advanced, with Honda rising 1.5 percent to 2,474 yen.

Traders gave the biggest support to the Topix index after the group’s gross dividend yield reached the highest since March 2009. The dividend yield was 3.45 percent. Mitsubishi Corp (8058), Japan’s biggest trading company, rose 2.6 yen to 1,302 yen.

Valuations

“We are not seeing a clear direction,” said Hideyuki Ookoshi, general manager at Chibagin Securities Co. “Valuations such as dividend yield show Japanese stocks are cheap after pricing in the worst-case scenario, while people find it hard to buy due to a slowdown in the global economy.”

Stocks fell earlier after the New York-based Conference Board’s index of U.S. consumer confidence slumped to 44.5, the weakest reading since April 2009, from a revised 59.2 reading in July.

“Economic uncertainty is lingering, while excessive pessimism has receded,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Consumer confidence was bad, and personal spending is likely to weaken in August after appearing to be good in July.”

Stocks also fell after Japan’s industrial production in July gained less than economists had expected. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, slid 1.8 percent to 1,665 yen.

SMBC Nikko Securities boosted its investment rating on Nintendo to “outperform” from “neutral,” saying pessimism on Nintendo and the home-use game market may be diminishing. The stock gained 4.4 percent to 13,400 yen.

Taiheiyo Cement fell 15 percent to 135 yen, dropping the most in the Nikkei 225, after announcing a plan to raise as much as 37.5 billion yen by selling shares to the public, according to a filing with the Japan’s finance ministry.

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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