Japanese Stocks Slide to Erase Gains From BOJ; Sharp Surges

  • Topix trading volume was 32 percent above its 30-day average
  • Hitachi, Panasonic tumble as earnings disappoint investors

Stocks fell in Tokyo, with the benchmark Topix index erasing gains from the Bank of Japan’s latest stimulus, as exporters declined after the yen jumped against the dollar and earnings disappointed investors.

Sharp Corp. surged as much as 26 percent after public broadcaster NHK said the struggling display maker’s board decided to give Taiwan’s Foxconn Technology Group preferred bidding rights to take over the company. Foxconn sweetened its offer, NHK said, without saying where it obtained the information. Sharp said it’s not the source of the report and that it will reach a final decision within a month. The stock pared its advance to 17 percent, which was still the biggest gain in the Topix.

The Topix lost 1.2 percent to 1,388.81 at the close in Tokyo after tumbling 3.2 percent on Wednesday. The measure fell below its closing level on Jan. 28, the day before the central bank surprised investors by saying it would adopt negative interest rates. The Nikkei 225 Stock Average slipped 0.9 percent to 17,044.99 on Thursday. The yen traded at 117.99 per dollar after strengthening 1.7 percent on Wednesday, the most since August, as weak U.S. services data fueled anxiety America’s economy isn’t immune to weakness elsewhere.

“There’s growing concern stocks will fall further as the impact from the BOJ wears off,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. “Investors are getting extremely gloomy.”

All but eight of the Topix’s 33 industry groups declined Thursday, with volume on the equity measure 32 percent higher than the 30-day average. Retailers, fishery and agricultural shares and insurers led losses, while non-ferrous metal companies, energy explorers and paper makers posted the largest gains.

Hitachi Ltd. plunged 7.8 percent after cutting its full-year profit forecast as Chinese growth slowed and oil prices plummeted. Panasonic Corp. tumbled 8.7 percent after lowering its operating-profit outlook. Of the companies that have posted results this earnings season and for which Bloomberg has estimates, 61 percent missed analyst predictions for sales, while about half did so for profit.

The Topix has fallen 10 percent this year, already erasing its 9.9 percent gain in 2015, as even the announcement of a fresh bout of BOJ stimulus fails to prevent the slowdown in China and rout in oil and other commodities from weighing on investor sentiment. That compares with a 21 percent drop in Shanghai shares, a 6.4 percent loss for the Standard & Poor’s 500 Index, and a 10 percent decline for a measure of European equities.

The Topix trades at 13.8 times estimated earnings, compared with 15.8 for the S&P 500 and 14.3 for the Stoxx Europe 600 Index.

E-mini futures on the S&P 500 climbed 0.7 percent. The underlying equity gauge rose 0.5 percent on Wednesday, advancing for the first time in three days, as commodity producers rallied with crude oil.

U.S. Weakness

A report showed U.S. service industries expanded in January at the slowest pace in almost two years, raising the risk that persistent weakness in manufacturing is starting to spread to the rest of the U.S. economy. The services slowdown comes as investors are on guard for signs that weakness in China is spilling over.

“The dollar-yen has gone back to where it was before the Bank of Japan’s additional easing,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “If the U.S. non-manufacturing sector is doing poorly, it’s possible that the American economy will stagnate. It’s possible that the U.S. jobs data coming out this week will be below expectations.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE