Japan Stocks Drop as U.S. Urges Japan Not to Devalue Yen

Japanese stocks fell, with the Topix (TPX) Index snapping its longest winning streak in two years, after the U.S. said it would urge Japan to refrain from policies to devalue the yen and Chinese economic data missed estimates.

Mazda Motor Corp. (7261), the Japanese automaker with the highest proportion of exports, slid 3.2 percent. Hitachi Construction Machinery Co (6305), a machinery maker that gets 17 percent of its revenue in China, fell 2.3 percent. Japan Steel Works Ltd., a supplier of parts for nuclear power plants, lost 5.4 percent after the Nikkei newspaper reported workers will be forced to take time off amid a drop in orders.

The Topix dropped 1.3 percent to close at 1,133.99 in Tokyo, ending an eight-day advance that was the longest such streak since February 2011. More than two stocks slid for each that gained today. The Nikkei 225 Stock Average (NKY) lost 1.6 percent to 13,275.66, with volume 30 percent above the 30-day average.

“Profit-taking is dominating the market as it seems like the yen won’t weaken beyond 100 per dollar soon,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about 15 trillion yen ($153 billion). “China’s data are confirming the underlying concern about its economic outlook.”

Beating Deflation

The Topix surged 57 percent from mid-November as the yen fell amid pledges from Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda to beat deflation. The gauge traded at 17.1 times average estimated earnings, compared with 14.4 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The 14-day relative strength index of the Topix has stayed for four days above the 70 threshold that some traders say signals shares have risen too much, too fast.

Futures on the S&P 500 Index (SPX) slid 0.3 percent. The measure fell 0.3 percent on April 12, when government data showed retail sales unexpectedly fell in March.

As G-20 finance ministers and central bankers prepare to convene this week in Washington, the U.S. Treasury said it will press Japan to refrain from competitive devaluation of the yen and European governments are urging it not to become too reliant on fiscal and monetary stimulus.

The yen has rebounded after weakening to 99.95 per dollar on April 11, the lowest since April 2009. It traded at 98.08 per dollar today and gained against 15 of its 16 major counterparts.

Exporters dropped with Mazda slipping 3.2 percent to 304 yen. Komatsu Ltd. (6301), a construction machinery maker that gets 80 percent of its revenue abroad, fell 2.9 percent to 2,433 yen. Toyota Motor Corp. (7203), the world’s biggest carmaker, declined 2.1 percent to 5,540 yen.

China’s Growth

China’s gross domestic product grew 7.7 percent in the three months ended March from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the 8 percent median forecast in a Bloomberg News survey of 41 analysts and 7.9 percent in the fourth quarter. Industrial production gained less than estimated in March, while retail- sales growth matched forecasts.

Companies that do business in China fell. Hitachi Construction slid 2.3 percent to 2,194 yen. TDK Corp. (6762), a maker of electronics components that depends on China for 27 percent of its revenue, dropped 3.2 percent to 3,210 yen.

Japan Steel Works dropped 5.4 percent to 490 yen, the biggest loss since Feb. 5, after the Nikkei reported the company was cutting shifts. About 500 employees, or 70 percent of the total at the firm’s plant on Japan’s northern island of Hokkaido, have agreed to take about two work days off a month for the half-year starting mid-April, spokesman Akito Aiuchi said today.

Pioneer Jumps

Among stocks that gained, Pioneer Corp. (6773) rose 4.3 percent to 219 yen after the Nikkei said Sharp Corp. (6753) plans to sell its entire stake in the audio equipment maker. Sharp, the unprofitable TV maker, gained 10 percent to 370 yen.

Kansai Electric Power Co., the Japanese utility most dependent on nuclear plants for power generation, jumped 16 percent to 1,369 yen on rising expectations for the restart of the nation’s reactors after the Nuclear Regulatory Authority announced new rules last week. The gain was the biggest since Dec. 17.

The Nikkei Stock Average Volatility Index (VNKY) fell 2.5 percent to 27.90, indicating traders expect a swing of about 8 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.

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.