Topix Falls to Six-Week Low as Fed Tapers, Yen Advances

Japanese stocks fell, with the Topix index closing at its lowest in six weeks, after the yen gained as the Federal Reserve pushed ahead with stimulus cuts amid turmoil in emerging markets.

Nissan Motor Co., a carmaker that gets 34 percent of revenue in North America, lost 2.4 percent. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, slid 5.3 percent after reporting its first profit drop in six quarters. Shinsei Bank Ltd. slumped 8.1 percent, the most on the Nikkei 225 Stock Average, after cutting its net-income forecast. Nintendo Co. fell 4.3 percent, reversing earlier gains, as President Satoru Iwata failed to impress investors with plans to improve profit at the video-game maker.

The Topix dropped 2.6 percent to 1,224.09 in Tokyo, its lowest close since Dec. 16. All 33 industry groups fell. The measure is headed for a 6 percent slump in January, the largest monthly loss since May 2012. The Nikkei 225 lost 2.4 percent today to 15,007.06. The yen slid 0.2 percent to trade at 102.47 per dollar after advancing 0.6 percent yesterday.

“The root cause of the issue in developing nations is U.S. monetary policy,” said Kenji Ueno, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co. “Concerns about emerging markets will stay with us because it will take a while to see how much the Fed’s tapering will actually impact them. The yen is being bought as a haven and that’s negative for stocks here.”

The Topix slid this year amid concern economic growth is slowing in China and as the Fed cuts stimulus, spurring demand for the yen as a haven. Japan’s retail sales slipped 1.1 percent in December from the previous month, data showed today. That compared with a 0.3 percent increase forecast by economists surveyed by Bloomberg.

U.S. Futures

Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The equity measure sank 1 percent yesterday as Fed policy makers said they will cut monthly bond buying by another $10 billion to $65 billion. The U.S. central bank this month began paring purchases by $10 billion a month to $75 billion.

Speculation about Fed policy has caused turmoil in emerging market currencies. The Turkish lira fell yesterday even after the country more than doubled its key interest rate to stem capital outflows.

Exporters Drop

Exporters fell as the yen maintained yesterday’s gain. Nissan lost 2.4 percent to 892 yen. Fanuc Corp., a maker of factory robotics that gets about 78 percent of its revenue abroad, declined 3.7 percent to 16,790 yen. Panasonic Corp., a consumer electronics company that gets 48 percent of its revenue outside Japan, slid 2.8 percent to 1,200 yen.

More than 400 companies on the Topix report earnings today and tomorrow, with about 640 filing results next week, according to data compiled by Bloomberg. Of the 65 companies listed in the Topix that have reported quarterly earnings since Jan. 1 and for which Bloomberg has estimates, 63 percent beat analysts’ estimates, according to data compiled by Bloomberg.

Sumitomo Mitsui Financial slid 5.3 percent to 4,823 yen. Net income fell 9.3 percent in the three months ended December from a year earlier, led by a bond-trading slump, an earnings statement showed yesterday.

Shinsei plunged 8.1 percent to 205 yen after cutting its net-income forecast for the year ending March to 37 billion yen ($361 million) from 48 billion yen, citing provisions for losses on interest payments.

Nintendo Falls

Nintendo lost 4.3 percent to 12,325 yen after saying it will stick with its main business model focusing on both gaming hardware and software. Shares earlier rose as much as 7.5 percent after the company said yesterday it will spend as much as 125 billion yen buying back as many as 10 million shares.

Nippon Steel & Sumitomo Metal Corp. gained 1 percent to 315 yen after the world’s biggest steelmaker by market value raised its annual forecast and its third-quarter profit tripled. The company benefited from a weaker yen and rebuilding in Japan after the March 2011 earthquake and tsunami.

The Topix traded at 1.24 times book value today, compared with 2.53 for the S&P 500 and 1.79 for the Stoxx Europe 600 Index yesterday. The Nikkei Stock Average Volatility Index rose 7.9 percent today. Trading volume of the Nikkei 225 was 22 percent above the 30-day average.

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