Nikkei 225 Halts 12-Week Rally on Sony Loss, Euro Concern

Japanese shares fell, with the Nikkei 225 Stock Average ending its longest streak of weekly wins since 1959, as Sony Corp. plunged on an unexpected loss and amid eurozone recovery concern.

Sony slumped 10 percent, the television maker’s biggest drop since November 2008. Nintendo Co., a maker of game consoles that gets 34 percent of its sales in Europe, fell 2.7 percent. Asahi Glass Co. declined 6.9 percent after its earnings forecast fell short of estimates. Yamada Denki Co. gained 5.8 percent after the consumer-electronics retailer said operating profit will beat expectations.

The Nikkei 225 slid 1.8 percent to close at 11,153.16 in Tokyo. The gauge fell 0.3 percent this week after rising 12 weeks through Feb. 1. The broader Topix Index slipped 1.2 percent to 957.35, with about four stocks falling for each that rose. The decline ended a 13-week rally, the longest since 1973, according to Bloomberg data.

“I think investors are ready to take profit when the market’s momentum wanes,” said Ichiro Yamada, general manager of equities who helps oversee about 300 billion yen ($3.2 billion) at Fukoku Mutual Life Insurance. “Earnings results don’t impress me. They may be OK until the beginning of the next fiscal year on the back of a weaker yen, but we don’t know how they will do after that.”

The Topix has surged about 33 percent since elections were announced on Nov. 14 amid optimism a new government will take aggressive steps to weaken the yen and beat deflation. The gauge is trading at 1.1 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.4 for the Stoxx Europe 600 Index.

Earnings Results

Of the 207 companies on the Topix that have reported earnings so far this quarter and for which Bloomberg has estimates, 63 percent have exceeded profit expectations. Some 54 percent missed sales projections, the data show.

Sony plunged 10 percent to 1,365 yen after yesterday posting an eighth straight quarterly loss, and again cut sales targets for TVs, gaming devices and compact cameras.

Asahi Glass slid 6.9 percent to 617 yen after saying net income for the year ended Dec. 31 fell 54 percent from a year earlier.

Yamada Denki added 5.8 percent to 3,625 yen after saying it expects a 57.3 billion yen operating profit for the fiscal year, beating an estimate of 52.4 billion.

Fujitsu Ltd. added 5.1 percent to 434 yen after the computer manufacturer said it will cut 5,000 jobs and merge its chip business with Panasonic Corp. Sumitomo Metal Mining Co., Japan’s top nickel producer, jumped 7.1 percent to 1,607 yen as it will slow the pace of investments in the next three years and shift focus to spending on raw material assets as competition for resources intensifies.

Current Account

Japan today posted back-to-back monthly current-account deficits for the first time since at least 1985, highlighting challenges for Prime Minister Shinzo Abe’s campaign to revive the economy. Separately, China reported today its exports rose more than estimated in January and consumer-price gains slowed from a year earlier.

Futures on the S&P 500 rose 0.1 percent today. The measure dropped 0.2 percent yesterday after European Central Bank President Mario Draghi signaled policy makers are concerned that the euro’s advance could damp inflation and hamper an economic recovery.

Nintendo lost 2.7 percent to 8,680 yen and Canon Inc., a camera maker that gets 30 percent of its revenue in Europe, slid 2.3 percent to 3,235 yen.

The Nikkei Stock Average Volatility Index added 4.6 percent to 27.71, indicating traders expect a swing of about 7.9 percent on the benchmark gauge over the next 30 days. Japan’s Nikkei 225 February options settled today at 11,151.92, according to data compiled by Bloomberg.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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

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