Nikkei 225 Declines on U.S. Jobs, Japan Machinery Orders

Japanese stocks fell, with the Nikkei 225 Stock Average declining the most in a month, after machinery orders plunged the most in a decade and a U.S. employment report missed estimates. Volume was the lowest since January.

Nissan Motor Co., a carmaker that counts North America as its biggest market, slid 2.4 percent. Komatsu Ltd., a construction equipment maker, fell 4 percent. Tokyo Electron Ltd., the world’s second-biggest maker of semiconductor production equipment, sank 6.1 percent after orders fell and its equity rating was cut by JPMorgan Chase & Co. Shares earlier pared losses after China’s inflation eased to a 29-month low in June, offering more room for monetary easing.

The Nikkei 225 fell 1.4 percent to 8,896.88 at the 3 p.m. close in Tokyo, its biggest decline since June 8. The broader Topix Index lost 1 percent to 763.93, with almost two shares falling for each that rose. The number of Topix companies’ shares traded was the lowest since January 5, according to data compiled by Bloomberg.

“Positive expectations toward the U.S. economy are falling off,” Tomomi Yamashita, a senior fund manager at Shinkin Asset Management Co. in Tokyo, which oversees $6.6 billion. Japan’s machine orders are “enormously bad. The global economy is moving in bad direction.”

The nation’s machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said. That was the biggest decline since 2001, according to data compiled by Bloomberg. Economists had been expecting a 2.6 percent decline. The nation’s current-account surplus was the smallest in May since at least 1996.

Komatsu sank 4 percent to 1,883 yen. Fanuc Corp., Japan’s biggest maker of industrial robots, slipped 3.6 percent to 12,740 yen.

Topix Valuations

The Topix has fallen 12 percent from its peak on March 27 as growth in the U.S. and China slows amid concern Europe’s debt crisis is spreading. The decline has cut the price of shares on the gauge to 1.1 times book value, compared with 2.1 times for the Standard & Poor’s 500 Index and 1.4 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than value of their assets.

Futures on the S&P 500 fell 0.4 percent today. The gauge slid 0.9 percent on July 6 as U.S. companies hired fewer workers than forecast in June, with the unemployment rate holding at 8.2 percent.

Nissan lost 2.4 percent to 728 yen. Fuji Heavy Industries Ltd., which makes Subaru cars and gets more than 45 percent of its revenue from North America, slid 2.7 percent to 639 yen.

“There’s disappointment about the jobs data,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “Many investors had expected the job number would beat market estimates.”

Crude Drops

Energy-related companies declined after crude oil for August delivery fell 3.2 percent to settle at $84.45 a barrel in New York on July 6. Inpex fell 2.1 percent to 443,500 yen Japan Drilling Co., an offshore drilling contractor, slipped 1.9 percent to 2,406 yen.

The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum slipped 2.2 percent, falling for a third day. Sumitomo Metal Mining Co. fell 1.9 percent to 887 yen.

Tokyo Electron tumbled 6.1 percent to 3,460 yen after saying April-June orders fell 28 percent from the preceding quarter to 79 billion yen ($993 million). The investment rating on the stock was trimmed to neutral from overweight by JPMorgan, which said it may take time for earnings to recover due to the slump in orders.

Other chip-related companies also declined. Advantest Corp., the world’s biggest manufacturer of memory-chip testers, lost 6.5 percent to 1,159 yen, the biggest drop on the Nikkei 225. Dainippon Screen Manufacturing Co., a maker of chip-manufacturing equipment, slid 5.1 percent to 545 yen.

China Inflation

Shares earlier pared losses on improved prospects for easing after China’s consumer price index rose 2.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 32 analysts. Producer prices dropped 2.1 percent, versus the median forecast for a 2 percent fall.

-- With assistance from Satoshi Kawano in Tokyo and Adam Haigh in Sydney. Editors: Jim Powell, Jason Clenfield

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