Japan’s Topix Rises on Chinese Stability; Fanuc Weighs on Nikkei

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Japan’s Topix index rose as signs of stability in Chinese markets triggered a rebound in global equities, while poor earnings from Fanuc Corp. pushed the Nikkei 225 Stock Average lower for a fourth day.

The robotmaker plunged 11 percent after cutting its full-year profit forecast amid slowing demand from China. Eisai Co. climbed 1.8 percent after receiving a favorable regulatory ruling for one of its kidney cancer drugs. Koito Manufacturing Co. soared 6.9 percent after the headlights maker raised its operating profit targets.

The Topix added 0.3 percent to 1,633.94 at the close in Tokyo, reversing a loss of 0.2 percent. The Nikkei 225 slid 0.1 percent to 20,302.91, with Fanuc contributing 97 points to the gauge’s decline. The MSCI All Country World Index snapped a five-day losing streak on Tuesday.

“Global risk-off movements are abating,” said Hiroichi Nishi, a manager at SMBC Nikko Securities Inc. in Tokyo. “Having fallen as much as they have, Japanese shares are starting to look attractive and their relative cheapness compared to U.S. stocks is beginning to stand out.”

Futures on the Standard & Poor’s 500 Index were little changed. The underlying U.S. equity measure increased 1.2 percent on Tuesday after the Shanghai Composite Index pared losses of as much as 5.1 percent to close 1.7 percent lower. The Shanghai gauge swung between gains and losses on Wednesday.

The Topix traded at 15.7 times estimated earnings, compared with a multiple of 17.7 for the S&P 500.

Japanese Earnings

Fanuc plunged the most in almost seven years, dropping 11 percent, after cutting its full-year net income forecast by 17 percent on slowing demand from China for its factory robots.

“This highlights the inflection risks from the Chinese economic growth model and the uncertainty going forward about the economic environment,” said Kazuhiro Miyake, chief strategist at Daiwa Institute of Research in Tokyo. “Amid this uncertainty, when you see a downward revision like the one from Fanuc, it reconfirms investors’ anxieties and causes them to continue repricing assets.”

Tokyo Electron Ltd. sank 11 percent after the semiconductor-equipment maker lowered its sales and profit outlook on concerns about demand in the chip market.

Eisai climbed 1.8 percent after the Food & Drug Administration granted one of its drugs breakthrough status, allowing it to be used for certain patients in treating kidney cancer.

Koito jumped 6.9 percent after raising its full-year operating profit forecast and several brokers increased their ratings and price targets on the stock because of strong demand for car headlights.

Fed Meeting

Investors are awaiting the conclusion of the Federal Reserve’s two-day meeting on Wednesday. While economists in a Bloomberg survey saw virtually no chance of a U.S. interest-rate increase this week, investors will scrutinize the statement for any hint that policy makers are inclined to move in September. The odds of an increase at that meeting were at 50 percent, according to the survey. Chair Janet Yellen said earlier this month that she expected to raise rates this year.

“The key will be their analysis of overseas developments,” said Ayako Sera, a Tokyo-based strategist at Sumitomo Mitsui Trust Bank Ltd., which manages the equivalent of $163 billion. If the Fed’s statement makes no mention of it, “investors will take it to mean there’s no problem and the market will move optimistically to anticipate a September rate hike. If the statement remarks about such risks, it’ll boost U.S. stocks but the yen will strengthen, which will be a negative for Japanese shares.”

Japanese retail sales fell 0.8 percent in June from May, less than economists’ forecasts for a 0.9 percent drop, a government report showed Wednesday.

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