Topix Caps Longest Losing Streak Since October on Yen

Japanese shares fell, with the Topix index erasing gains in the final minutes of trading to cap its longest losing streak since October, as shippers slumped and the yen gained.

Nippon Yusen KK, Japan’s biggest shipper, lost 3.1 percent to lead declines in the marine-transport sector after a measure of commodity shipping costs tumbled 17 percent last week. Sharp Corp., a supplier of displays for Apple Inc.’s iPhone and iPad, sank 8.7 percent on saying it’s considering ways to raise capital. Toyota Motor Corp., which sank 8.3 percent last week, rebounded 1.8 percent today after Mizuho Financial Group Inc. said valuations are “relatively cheap.” Oil explorer Inpex Corp. gained 2.6 percent as crude prices rose.

The Topix fell 0.1 percent to 1,132.76 at the close of trading in Tokyo, its seventh straight daily decline. The measure reversed early losses to rise as much as 0.9 percent and maintained its advance for most of the afternoon session, only erasing gains in the final minutes. The Nikkei 225 Stock Average lost 0.4 percent to 13,910.16. The yen gained 0.1 percent to 101.57 per dollar after strengthening 1.6 percent last week.

“Earnings are about to start in earnest, and so the general trend is for investors to wait and see,” said Yoshihiro Okumura, a general manager at Chiba-Gin Asset Management Co. in Tokyo. Still, “the market declined a lot last week, so there’s a technical rebound for shares like Toyota’s, and the bottom of the market is looking solid.”

Biggest Drop

The Topix tumbled 6.7 percent last week to extend its 2014 decline to 13 percent, the steepest among 24 developed markets tracked by Bloomberg. The Japanese measure’s 14-day relative strength index dropped to 33 today, near the 30 threshold that some traders view as a signal the index has dropped too far.

“Japanese shares have led a global decline, and they’ve definitely priced in any negativity,” said Seiichi Miura, a strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “Earnings season gets underway next week and if the results aren’t that bad, then the market will likely calm down. But until then we’ll have to trade with a lack of catalysts.”

Fast Retailing Co. (9983) slid 3 percent to 32,795 yen, after slumping 13 percent last week as Asia’s biggest clothing retailer lowered its annual profit forecast. The stock has the heaviest weighting on the Nikkei 225 and was the biggest drag on the measure today.

Shippers Sink

The Topix Marine Transportation Index lost 2.5 percent today, the most among the 33 industry groups on the broader gauge. Nippon Yusen declined 3.1 percent to 281 yen. Mitsui OSK Lines Ltd. dropped 2.2 percent to 361 ye,n and Kawasaki Kisen Kaisha Ltd. slipped 1.9 percent to 207 yen. The Baltic Dry index (BDIY) slumped for a 14th day on April 11, its longest losing streak in 10 months.

Sharp tumbled 8.7 percent to 273 yen, the biggest drop since June 3. The electronics maker plans to increase capital through a public share offering in the fiscal year ending March 2015, the Asahi newspaper reported. Sharp said in a statement to the Tokyo Stock Exchange yesterday that it’s considering various options to increase capital and hasn’t decided on a method.

Among stocks that rose, Toyota gained 1.8 percent to 5,410 yen, the biggest support to the Topix. (TPX) Fuji Heavy Industries Ltd., which makes Subaru cars, climbed 2.6 percent to 2,712 yen.

Mizuho analysts Takashi Moriwaki and Tomonori Ohata raised investment ratings and share-price targets on the automakers, citing “cheap” valuations considering the likelihood of increased profits from rising demand in North America.

Oil shares advanced with the commodity as the United Nations Security Council met to discuss worsening violence in Ukraine. Inpex rose 2.6 percent to 1,382 yen. Japan Drilling Co. added 0.7 percent to 4,075 yen. The Topix Mining Index climbed 2.5 percent after falling 2.6 percent last week.

Relative Value

The Topix traded at 1.11 times book value today, compared with 2.54 for the Standard & Poor’s 500 Index and 1.85 for the Stoxx Europe 600 Index on April 11. Trading volume on the Japanese gauge was 21 percent below than the 30-day average today.

“You could argue that in the short-term it’s oversold,” said Stuart Beavis, head of institutional equity derivatives at Vantage Capital Markets in Hong Kong. “The sentiment is to still be involved in Japan from a small long position, and we’re seeing a little buying on dips.”

Futures on the S&P 500 lost 0.2 percent today. The measure slumped last week by the most since 2012. Citigroup Inc. is due to report earnings today after JPMorgan Chase & Co. sank on April 11 as first-quarter profit fell short of estimates. The Nasdaq Composite Index last week capped its worst week since 2012 amid concern valuations for technology stocks have climbed too high as earnings season starts.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim Powell

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.