Japan Shares Fall Most in Three Weeks on Yen, China Rates

Japanese stocks fell, with the Topix index slumping the most in three weeks, after the yen jumped and China’s money-market rates surged.

Honda Motor Co., a carmaker that gets about 83 percent of revenue overseas, slid 2.8 percent. Nitto Denko Corp. fell the most on the Nikkei 225 Stock Average after JPMorgan Chase & Co. cut its rating on the chemical-products maker. Japan Exchange Group Inc., operator of the country’s main bourse, dropped 3.7 percent after its profit forecast missed estimates. Fanuc Corp., which supplies robotics for Chinese factories, lost 2.3 percent.

The Topix fell 1.5 percent to 1,195.98 at the close in Tokyo, the biggest drop since Oct. 2. All 33 industry groups fell after rising on speculation the Federal Reserve would delay tapering stimulus. The Nikkei 225 lost 2 percent to 14,426.05. The yen gained against all of its 16 major counterparts, rising 0.8 percent to trade at 97.37 per dollar.

“The yen’s gain is hitting stocks,” said Ichiro Yamada, general manager of equities at Fukoku Mutual Life Insurance. “Volume is too thin to send equities beyond last month’s high. I think investors are taking profit.”

Exporters fell as the yen gained and China’s benchmark money-market rate jumped the most since July as the central bank refrained from adding funds to markets and corporate tax payments drained cash.

Honda slid 2.8 percent to 3,850 yen. Komatsu Ltd., a construction-machinery maker that gets about 80 percent of revenue abroad, dropped 1.2 percent to 2,371 yen, revering a gain of as much as 1.9 percent. Fanuc lost 2.3 percent to 16,250 yen.

Stimulus Bets

Futures on the Standard & Poor’s 500 Index slipped 0.4 percent today. The equity gauge climbed 0.6 percent in New York yesterday after U.S. payrolls grew less than forecast, adding to speculation record stimulus will be maintained. U.S. employers added 148,000 workers to payrolls in September, indicating the world’s largest economy had little momentum heading into the 16-day government shutdown. The Fed has said it needed more evidence of recovery before cutting bond purchases.

The Topix added 0.2 percent this month, last among its 24 developed-market peers, after Prime Minister Shinzo Abe decided to push ahead with a sales-tax increase and the U.S. shut down parts of its government. The equity gauge remains the best performer among the markets this year.

About 570 companies on the 1,744-member Topix are scheduled to report results from today through Oct. 31, with earnings season peaking next week, according to data compiled by Bloomberg.

Earnings Outlook

Goldman Sachs Group Inc. named 10 stocks including Nintendo Co. and Sony Corp. that have “significant potential” to miss quarterly earnings estimates. Dainippon Screen Manufacturing Co., Fuji Heavy Industries Ltd. are among five stocks that may post positive surprises, analysts led by Shin Horie wrote in the report.

Nitto Denko slumped 7.5 percent to 5,300 yen after JPMorgan cut its rating to neutral from overweight and reduced the price target to 6,000 yen.

Japan Exchange dropped 3.7 percent to 2,219 yen after saying it expects to earn 22 billion yen ($226 million) in the year ending March 31, falling short of the average of estimates compiled by Bloomberg.

Among stocks that gained, GCA Savvian Corp. rose 2.6 percent to 1,095 yen. The company will expand its merger and acquisition advisory business in India by partnering with ICICI Securities Ltd., according to a Nikkei newspaper report. Nidec Corp., a maker of small precision motors, climbed 4.5 percent to 9,150 yen after raising its profit forecast 2.8 percent to 55 billion yen.

The Topix traded at 1.25 times book value today, compared with 2.57 for the S&P 500 and 1.80 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 15.38 today, compared with its five-year median of 19.27.

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