Japanese Stocks Cap Worst Monthly Run in Two Years

Japan stocks fell on the busiest day of earnings season, with the Topix index completing a third straight monthly decline, as the yen traded near a one-month high to the dollar.

Honda Motor Co., a carmaker that gets almost half its revenue from North America, lost 2.2 percent before a Federal Reserve policy decision. Tokyo Electric Power Co., the owner of the crippled Fukushima Dai-Ichi nuclear power plant, dropped 5.7 percent on a report a local government opposes reactor restarts. Gungho Online Entertainment Inc., an Internet-game company that surged tenfold this year through yesterday, plunged 13 percent. KDDI Corp., the nation’s third-largest mobile carrier by value, jumped 6.9 percent as operating profit surged.

The Topix dropped 1.5 percent to 1,131.70 at the close in Tokyo after rising the most in three weeks yesterday. All but four of the 33 industry groups retreated. The gauge slid 0.2 percent this month. The Nikkei 225 Stock Average lost 1.5 percent to 13,668.32 today, sliding 0.1 percent on the month.

“Investors don’t want to make big moves until they see how the Fed’s decision affects U.S. equities,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co., a unit of Japan’s third-biggest lender by market value. “Japanese stocks were sensitive to the yen’s level throughout the day. They extended losses toward the close as the yen spiked.”

This month’s decline in the Topix caps the longest losing streak since September 2011. The gauge remains 32 percent higher for the year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. Investor attention is now shifting to whether reforms will be implemented and the sales tax raised as planned to rein in the fiscal deficit and national debt.

Earnings Peak

Earnings season for Topix companies peaked today with 284 firms reporting results. Of the 131 companies on the measure that have posted quarterly results and for which Bloomberg has estimates, 52 percent beat projections. Profits on the gauge are projected to rise 66 percent from the previous quarter, according to a Bloomberg survey.

Futures on the S&P 500 fell 0.1 percent today after the measure gained less than 0.1 percent in New York yesterday as investors weighed earnings. U.S. home prices rose 12.2 percent in May, the most in more than seven years, a report showed.

The Federal Open Market Committee, which has said it may start paring stimulus should the U.S. economy meet forecasts, concludes a two-day meeting today. The Fed will begin to reduce bond purchases in September, according to a Bloomberg survey of economists.

Exporters Retreat

Exporters retreated as the yen held gains against the dollar and strengthened in the last hour of trading. Japan’s currency touched 97.78 to the greenback today. Honda, Japan’s third-largest carmaker, lost 2.2 percent to 3,630 yen. Nikon Corp., the world’s second-biggest camera maker, fell 2.1 percent to 2,049 yen.

Tokyo Electric Power declined 5.7 percent to 599 yen. Trade Minister Akira Amari did not persuade Niigata Governor Hirohiko Izumida to approve reactor restarts at a meeting yesterday, the Nikkei newspaper reported. The prefecture is home to the utility’s Kashiwazaki-Kariwa nuclear plant, the world’s largest by generating capacity.

Japan Airlines Co., which relisted last year after emerging from bankruptcy, slipped 2.6 percent to 5,200 yen. Jana Partners LLC, a $6 billion activist hedge fund run by Barry Rosenstein, said it took a stake in the carrier.

Gungho Online tumbled 13 percent to 80,000 yen, its lowest close since April 24, after plunging 13.4 percent yesterday. The company is the best-performing stock this year on the MSCI World Index of developed-market firms.

Takara Holdings Inc. slumped 10 percent to 832 yen, the most in more than two years and the largest slide on the Nikkei 225. The drinks maker yesterday posted an operating loss of 241 million yen for the quarter ended in June.

KDDI Climbs

Companies reporting better earnings advanced. KDDI jumped 6.9 percent to 5,410 yen as operating profit surged 90 percent from the previous year. Hitachi Ltd. gained 2.8 percent to 658 yen as the electronic-equipment manufacturer increased its first-half profit forecast by 50 percent to 15 billion yen.

The Topix traded at 1.21 times book value today, compared with 2.48 for the S&P 500 and 1.70 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s historic volatility was at 24.76 today, down 43 percent from a July 2 high of 43.21.