Japan Stocks Fall; Nikkei 225 Posts Worst Yearly Start Since '97

  • China markets rebound as authorities scrap circuit breaker
  • U.S. futures jump after S&P 500 caps worst start since 1928

Japanese stocks fell as China’s decision to maintain the level of its currency for the first time in nine days failed to stop the Nikkei 225 Stock Average posting its worst first week of a year since 1997.

The Topix index dropped for a fifth day, losing 0.7 percent to 1,447.32 at the close in Tokyo. It swung from a 1 percent advance as tire makers led gains and utilities fell. The Nikkei 225 Stock Average lost 0.4 percent to 17,697.96, taking its weekly retreat to 7 percent. Fast Retailing Co., which is the gauge’s biggest stock, slumped after cutting its earnings forecasts. The yen weakened 0.6 percent to 17.70 per yuan in offshore trading, the first decline since Dec. 30.

“The situation is fragile, and the market sentiment seems to be moving on a short-term basis,” Ryoma Sugihara, head of Equity Flow Sales at Societe Generale Securities, based in Tokyo, said by phone. “The overall weaker yuan trend hasn’t changed, but because authorities had taken a stronger fighting stance, excessive risk sentiment has eased.”

China’s central bank set its yuan reference rate at 6.5636 per dollar, near Thursday’s level of 6.5646, providing relief to investors who had taken this week’s steps to weaken the currency as a sign the Chinese economy was weakening and that the nation’s central bank was moving toward a competitive currency devaluations.

China Stocks

Shares in Shanghai rose 2.4 percent after authorities late on Thursday announced the suspension of circuit breakers that have been triggered twice this week, including Thursday when trading was halted a half hour after markets opened. The measures, introduced Monday, have been blamed for exacerbating volatility that has rippled throughout global markets.

E-mini futures on the Standard & Poor’s 500 Index added 0.9 percent after the underlying measure sank 2.4 percent on Thursday, capping its worst start to a year since 1928. The U.S. reports employment figures Friday, with economists surveyed by Bloomberg forecasting a 200,000 jobs gain and the unemployment rate to hold at 5 percent.

Billionaire Tadashi Yanai’s Fast Retailing, which accounts for more than 8 percent of the Nikkei 225 index, sank 2.3 percent after cutting full-year earnings forecasts by 10 percent as warm weather hurt sales of winter clothes at its Uniqlo brand.

Ryohin Keikaku Co. soared 7.9 percent after the operator of Muji stores raised its full-year operating profit target by 3.1 percent.

Yakult Honsha Co. tumbled 5 percent after Barclays Plc cut its rating on the yogurt maker. Canon Inc. fell 1.9 percent after JPMorgan Chase & Co. lowered its rating on the camera maker.

Advantest Corp. jumped 2 percent after the semiconductor systems maker denied a from Nikkei newspaper report that operating profit in the nine months through December is expected to fall 30 percent.

January futures and options on the Nikkei 225 settled at 17,420.01, according to data compiled by Bloomberg.

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