Japanese Shares Fall as Earnings From Canon to Apple Disappoint

  • Canon tumbles after cutting forecasts; iPhone suppliers drop
  • 108 companies on the Topix report earnings on Wednesday

Stocks in Tokyo fell as investors weighed earnings and braced for central bank decisions in the U.S. and Japan. Canon Inc. tumbled after cutting its profit forecasts while Apple Inc.’s suppliers slumped after the iPhone maker posted its first quarterly sales drop in more than a decade.

The Topix index fell 0.5 percent to 1,384.30 at the close in Tokyo, heading for its worst weekly loss in a month. The Nikkei 225 Stock Average retreated 0.4 percent to 17,290.49. Canon was the second-biggest drag on the Topix after cutting its full-year operating profit forecast by 17 percent.

“If a company posts double-digit declines in earnings, it’s going to get whacked,” said Chihiro Ohta, senior strategist at SMBC Nikko Securities Inc. “I think we’re going to see quite a few companies post drops like that.”

Some 108 companies on the Topix report earnings Wednesday, including heavy machinery manufacturer Kawasaki Heavy Industries Ltd. Canon slumped 5.3 percent after cuttings its profit outlook due to a stronger yen. The world’s biggest camera maker slashed its net income target by 13 percent and forecast operating profit that missed analysts’ estimates.

Apple posted its first quarterly revenue drop in more than a decade on Tuesday and forecast another decline in the current period, dragged down by waning demand for the iPhone. In Japan, iPhone parts maker Alps Electric Co. fell 1.2 percent, while Murata Manufacturing Co. slipped 4.4 percent.

Electric-appliance manufacturers and carmakers were the biggest drags on the Topix on Wednesday, with Toyota Motor Corp. falling 1.8 percent. Mitsubishi Motors Corp. lost 2.8 percent, taking its loss since April 19 to 51 percent as a scandal over improper fuel economy testing deepens. 

Coca-Cola East Japan Co. surged 13 percent and Coca-Cola West Co. jumped 10 percent after the companies announced plans to merge. Nihon Trim Co. climbed 10 percent after the water-purifier maker raised its full-year operating profit forecast.

Japanese company profits are being hurt by the stronger yen and slowing emerging economies, Mitsubishi UFJ Morgan Stanley Securities Co. wrote in a note dated April 27. Even if valuations are attractive, it’s unlikely stock-pickers will actively buy the nation’s shares, the brokerage’s strategists led by Chisato Haganuma wrote. The yen rose 6.8 percent against the dollar last quarter, its biggest such jump since December 2008.

Policy Meetings

Investors are waiting for the Federal Reserve and Bank of Japan to update policy. While traders are pricing in zero chance of the Fed increasing interest rates Wednesday in Washington, they’ll will be looking for any clues on potential shifts in the trajectory of borrowing costs. Twenty-three of 41 analysts surveyed by Bloomberg expect the BOJ will expand stimulus on April 28. Japan’s consumer prices and retail sales data for March will also be released Thursday in Tokyo.

Futures on the Standard & Poor’s 500 Index slid 0.3 percent after the underlying U.S. equity gauge added 0.2 percent on Tuesday, edging higher amid mixed corporate earnings results, while crude oil rallied to boost commodity producers.

Tokyo’s stock market will be closed on Friday and May 3-5 for public holidays.

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