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Topix Falls to Cap Biggest Monthly Drop Since May 2012

Jan. 31 (Bloomberg) -- Japan’s Topix index fell as the yen strengthened against the dollar, with the equity gauge capping its largest monthly decline since May 2012.

Toyota Motor Corp., the world’s biggest carmaker, retreated 1.3 percent after the yen rose. Toshiba Corp. sank 7.5 percent, the most on the Nikkei 225 Stock Average, after third-quarter profit for the maker of products from nuclear reactors to flash-memory chips missed analyst estimates. Fujitsu Ltd. surged 13 percent to a three-year high as earnings at the computer-equipment manufacturer beat expectations.

The Topix index slid 0.3 percent to 1,220.64 at the close in Tokyo. The measure dropped 3.5 percent this week and 6.3 percent for the month as weak economic data from China and a sell-off of emerging-market currencies sparked a global equities rout. The Nikkei 225 lost 0.6 percent today to 14,914.53. The yen gained 0.3 percent to 102.46 per dollar, poised for its steepest monthly rise since April 2012.

“It’s hard to tell just how far the chaos from the emerging-market currencies will spread globally,” said Yoshihisa Okamoto, the Tokyo-based head of equity research at Mizuho Asset Management Co. “In the FOMC statement, the Fed didn’t suggest there’s concern about emerging markets, and that’s causing unease among investors.”

The Federal Open Market Committee this week left unchanged its statement that it will probably hold its target interest rate near zero “well past the time” that unemployment falls below 6.5 percent, “especially if projected inflation” remains below the committee’s longer-run goal of 2 percent. The U.S. central bank said it will cut monthly bond purchases by a further $10 billion to $65 billion.

Earnings Season

More than 600 companies on the Topix report earnings next week, according to data compiled by Bloomberg. Of the 94 companies listed in the gauge that have posted quarterly results since Jan. 1 and for which Bloomberg has estimates, 59 percent beat analysts’ projections for profit, according to data compiled by Bloomberg.

The Nikkei 225 will tumble 40 percent to 9,000 by year-end as a sales-tax increase in April and a slowdown in emerging markets cause an unexpected decline in corporate earnings, Myojo Asset Management Co. said.

Profit for Nikkei 225 companies will fall about 20 percent in the 12 months ending March 2015 as gains in taxes and living costs squeeze consumers, Makoto Kikuchi, Tokyo-based chief executive officer at the hedge fund, said in an interview. Every other firm surveyed by Bloomberg predicts a rally. A deceleration in emerging economies as the Fed reduces stimulus will also weigh on shares, Kikuchi said.

Exporters Drop

Futures on the Standard & Poor’s 500 Index sank less than 0.1 percent. The U.S. equity measure rose 1.1 percent yesterday erasing this week’s loss, as earnings topped estimates at companies from Facebook Inc. to PulteGroup Inc. and consumer spending climbed. The index had lost 1 percent the previous day as the Fed decided to cut monthly bond purchases by $10 billion.

Exporters fell. Toyota lost 1.3 percent to 5,922 yen. Nikon Corp., a camera maker, declined 2.1 percent to 1,769 yen.

Toshiba retreated 7.5 percent to 432 yen after posting third-quarter operating profit of 47.8 billion yen ($467 million). Analysts surveyed by Bloomberg had expected 72.5 billion yen.

Fujitsu surged 13 percent to 578 yen, the largest one-day gain since May 2009. Third-quarter net income of 12 billion yen topped the 7.9 billion yen estimate of analysts surveyed by Bloomberg.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

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