Japanese shares fell, with the Topix index dropping for the first time in three days, as the yen held gains against the dollar after disappointing U.S. jobs data. Insurers led losses among the gauge’s 33 industry groups.
Insurance companies dropped 2.9 percent after jumping 8 percent in the last two days. T&D Holdings Inc. led the sector’s decline. Hitachi Zosen Corp. tumbled 5.7 percent after the environmental-equipment maker’s loss widened. Mitsumi Electric Co., which produces computer parts, slumped the most on the Nikkei 225 Stock Average after posting a 1.7 billion yen ($17.1 million) first-quarter loss. Casio Computer Co. jumped 5 percent after reporting a 31 percent increase in profit.
The Topix lost 1 percent to 1,184.74 at the close in Tokyo, with all but two subsectors falling. The gauge added 5.7 percent in the past two sessions, the biggest two-day advance since June 28. The Nikkei 225 fell 1.4 percent to 14,258.04. The yen traded at 98.61 per dollar from as much as 99.95 on Aug. 2.
“Stocks rose a bit too strongly last week, so investors are reversing those trades,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which has about 35 trillion yen in assets. “While U.S. jobs data signal the Fed is unlikely to taper soon, the yen rose so it’s negative for Japanese stocks as it leads to risk-off sentiment.”
Share swings are increasing as investors weigh Prime Minister Shinzo Abe’s stimulus policies against concern China’s economy is slowing and prospects the U.S. will end bond-buying. The Topix moved more than 2.4 percent a day on average last week, the biggest fluctuations since June. Historical volatility over the last 90 days, a period that includes May and June when the index plunged more than 18 percent, reached almost 32 percent last week, the highest since the crisis after the 2008 collapse of Lehman Brothers, data compiled by Bloomberg show.
The Topix rose 39 percent this year through Aug. 2, making Japan the world’s best developed equity market, amid optimism Abe will push through reforms while the Bank of Japan continues record stimulus. The equity gauge traded at 1.24 times book value today, compared with 2.51 for the Standard & Poor’s 500 Index and 1.69 for the Stoxx Europe 600 Index on August 2.
Futures on the S&P 500 slipped 0.1 percent. The gauge rose 0.2 percent to a record on Aug. 2 as jobs data signaled the Fed may continue its stimulus efforts. U.S. employers added 162,000 workers to payrolls in July, the least in four months and below a median economist estimate of 185,000. The Fed has said sustained improvement in the labor market will be a condition for reducing its record $85 billion in monthly bond purchases.
“Investors are seeking to take profits,” said Toshiyuki Kanayama, senior market analyst at Tokyo-based Monex Inc. “The yen is reacting to patchy U.S. data and the likelihood the Fed won’t taper stimulus this year.”
In China, an index of non-manufacturing sectors rose for the first time since March, a report Aug. 3 showed. HSBC Holdings Plc and Markit Economics’ China services gauge was unchanged at 51.3 in July from June, data showed today.
Corporate earnings season continued in Japan. Profits have increased 91 percent at the 1,054 Topix companies that have reported, according to data compiled by Bloomberg. Of the 189 companies on the gauge that posted quarterly results for which Bloomberg has estimates, 58 percent beat projections.
“Earnings aren’t bad,” said Takuya Yamada, a senior portfolio manager who helps manage 140 billion yen for Astmax Asset Management Inc. in Tokyo. “But expectations were so high that they’re unlikely to have much of an impact in terms of pushing prices up further.”
Mitsumi Electric tumbled 5.9 percent to 724 yen, its steepest fall since June 13. The supplier to Nintendo Co. and Apple Inc. recorded an operating loss of 2.7 billion yen and a net loss of 1.7 billion yen.
Hitachi Zosen dropped 5.7 percent to 149 yen, the most since June 13 and the second-biggest loss on the Nikkei 225. The maker of garbage incinerators and industrial-waste processing facilities posted a 4.4 billion yen loss, more than six times wider than the previous year.
T&D Holdings fell 3.5 percent to 1,312 yen, leading declines on the Topix Insurance Index, the worst-performing subsector today. All six companies in the measure fell at least 2 percent. Insurers were the top-performing group on Friday and the third-best for the week ended Aug. 2.
Among stocks that rose, Yachiyo Bank Ltd. and Tokyo Tomin Bank Ltd. surged after the Nikkei newspaper reported the two regional lenders are in talks of a possible merger in fall 2014. Yachiyo Bank, whose largest shareholder is Sumitomo Mitsui Trust Holdings Inc., jumped 9.2 percent to 3,155 yen, its biggest increase in 10 weeks. Tokyo Tomin, whose biggest stock owner is Mizuho Financial Group Inc., climbed 6.1 percent to 1,190 yen. The banks said no decision had been made.
Casio gained 5 percent to 972 yen, the most in nearly two months, after the maker of the world’s first compact all-electric calculator reported that profit increased 31 percent to 2.1 billion yen.