Japanese Stocks Fall Most in Two Weeks as U.S. Jobs Report Shows No Growth

Japanese stocks fell the most in two weeks after a report showed U.S. employment stagnated, stoking concern the world’s biggest economy may slip into a recession and damping the earnings outlook for Asian exporters.

Honda Motor Co., a carmaker that gets 44 percent of its revenue in North America, dropped 4.7 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender, dropped 2.3 percent after banks fell in the U.S. Komatsu Ltd. (6301), the world’s No. 2 maker of construction equipment, fell 5.4 percent after Citigroup Global Markets Japan Inc. lowered its rating on the stock to “hold” from “buy,” citing a drop in its share of the Chinese market amid competition with local manufacturers.

The Nikkei 225 (NKY) Stock Average fell 1.9 percent to 8,784.46 as of the 3 p.m. close in Tokyo, the biggest drop since Aug. 19. The broader Topix index declined 1.8 percent to 755.82.

“Jobs related to personal spending have been lost, showing U.S. domestic demand is very weak,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “Stocks are falling broadly, especially export-related equities.”

Futures on the Standard & Poor’s 500 Index declined 0.8 percent today. In New York, the index fell 2.5 percent to 1,173.97 on Sept. 2 after a report showed U.S. payrolls were unchanged in August, the weakest reading since September 2010. The median forecast in a Bloomberg News survey called for an increase of 68,000. U.S. markets will be closed today for a public holiday.

Topix Performance

The Topix has lost about 16 percent this year as concerns about an economic slowdown in the U.S. and Europe’s debt crisis damped demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.89 times book value, the lowest since March 2009. Gross dividend yields on the index were 2.44 percent, near the highest since April 2009.

“U.S. jobs numbers were pretty bad with data for June and July being revised downward,” said Masahiko Sato, an analyst at Nomura Holdings Inc. “Japanese stocks are relatively cheap when you look at valuations such as price-to-book ratio and dividend yields. But they are not being bought due to uncertainty in the U.S. and Europe.”

Exporters fell with Honda contributing the most to the Topix’s decline. Honda dropped 4.7 percent to 2,389 yen, and Toyota Motor Corp. (7203), Japan’s biggest carmaker, slid 2.6 percent to 2,640 yen, the lowest since 2003. Mitsubishi UFJ Financial Group dropped 2.3 percent to 334 yen, while Canon Inc. (7751), the world’s biggest camera maker, declined 2.5 percent to 3,505 yen.

Fed’s Tools

The S&P 500 slid as much as 18 percent from a three-year high on April 29 amid concern the U.S. economy was weakening. Stocks rebounded at the end of August as Federal Reserve Chairman Ben S. Bernanke said in an Aug. 26 speech in Jackson Hole, Wyoming, that the central bank has tools to stimulate growth without signaling he will use them. He echoed comments from dissenting members of the Federal Open Market Committee who said economic reports aren’t pointing to a recession.

Komatsu fell 5.4 percent to 1,973 yen after Citigroup Global Markets Japan Inc. lowered its rating on the stock to “hold” from “buy,” citing a drop in its share of the Chinese market amid competition with local manufacturers. Hitachi Construction Machinery Co. also slid 5.4 percent to 1,396 yen after Citigroup cut its stock price estimate to 1,600 yen from 1,750 yen.

Fast Retailing Co., Asia’s biggest apparel chain, dropped 1.7 percent to 13,900 yen after it said same-store sales at its Uniqlo casual clothing stores in Japan dropped 9.4 percent in August from a year earlier.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.