Japanese Stocks Fall on Overbought Signals; Sumco Surges

Japanese stocks fell, with the Topix Index halting a two-day gain, after a technical indicator showed shares may have been overbought on the gauge and revised estimates confirmed the nation’s economy contracted. Shares rose earlier after U.S. jobs data topped estimates.

Sharp Corp. dropped 5.6 percent after closing at the highest level since Aug. 30 last week. Hino Motors Ltd. slid 1.3 percent after recalling trucks in the U.S. due to a battery flaw that could spark fires. Advantest Corp., the world’s biggest maker of memory-chip testers, rose 3.9 percent after saying it expects new orders to rise 20 percent this quarter. Sumco Corp. soared 17 percent after the wafer maker’s price target was raised at Bank of America Merrill Lynch.

The Topix fell 0.2 percent to 788.48 at the close in Tokyo after rising as much as 0.5 percent. Shares also declined after the yen rose against 14 of its 16 major counterparts. The Nikkei 225 Stock Average added 0.1 percent to 9,533.75, with trading volume 9 percent below the 30-day average.

“Low volume and a slowdown in the yen’s decline are keeping a lid on Japanese equities,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co., a unit of Japan’s third-biggest lender by market value. “The Nikkei is in a range around 9,500.”

The Topix advanced 9.2 percent since Nov. 14, when Prime Minister Yoshihiko Noda called for elections on Dec. 16, causing the yen to drop on expectations the opposition Liberal Democratic Party will win and call for more monetary easing.

Relative Value

The Topix traded at 0.9 times book value compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

The 14-day relative strength index for the Topix rose to 70.6 on Dec. 7, climbing above the 70 threshold that some traders say signals a retreat is likely.

Sharp dropped 5.6 percent to 204 yen after its 14-day RSI gained to 75.8 on Dec. 7. Nippon Sheet Glass Co. fell 4.4 percent to 86 yen after its RSI climbed above 70 last week.

Shares also declined after Japan’s gross domestic product contracted an annualized 3.5 percent in the quarter through September, the government’s second estimate showed today, indicating a technical recession.

Futures on the S&P 500 rose 0.1 percent today. The gauge climbed 0.3 percent on Dec. 7, when Labor Department figures showed employment climbed by 146,000 in November following a revised 138,000 gain in October. The unemployment rate fell to 7.7 percent, the lowest since December 2008, as the size of the labor force shrank.

Chinese Data

Chinese industrial production climbed 10.1 percent in November from a year earlier and retail sales growth accelerated to 14.9 percent, topping estimates, while inflation was 2 percent, the statistics bureau said yesterday. Exports rose 2.9 percent from a year earlier and imports were unchanged last month, the customs administration said today, missing estimates.

“U.S. and Chinese economic data are doing OK, which won’t put downward pressure on shares,” said Akihiro Tsunoda, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which manages about 5 trillion yen ($61 billion) in assets. “Still, investors are inclined to sit on the fence this week ahead of the Japanese election.”

The Nikkei Stock Average Volatility Index gained 5.6 percent to 17.88, indicating traders expect a swing of about 5.1 percent on the benchmark gauge over the next 30 days.

Hino Motors dropped 1.3 percent to 700 yen after recalling certain medium-duty trucks from the ’05-’13 model years because a circuit from the battery to the starter could short after wear and may cause a fire, the U.S. National Highway Traffic Safety Administration said.

Advantest Outlook

Advantest advanced 3.9 percent to 1,108 yen after President Haruo Matsuno said in an interview that orders will increase to about 30 billion yen this quarter and reach 70.5 billion yen for the six months ending March 31.

Sumco surged 17 percent to 680 yen. Bank of America analyst Takashi Enomoto lifted its price target to 930 yen from 820 yen and maintained a buy rating. Wafer prices are expected to gain in the first half, and the company’s streamlining has been more effective than expected, the analyst wrote.

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