Japan Stocks Fall on Bets of U.S. Rate Rise, Weaker Japanese GDP

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Japanese stocks fell after U.S. jobs data spurred speculation of an earlier interest-rate increase in the world’s largest economy, while a report showed Japan’s exit from a recession was weaker than previously reported.

Real-estate stocks declined, with Mitsubishi Estate Co. dropping 2 percent. Mobile carriers retreated after Mizuho Financial Group Inc. downgraded NTT Docomo Inc., which fell 1.5 percent. Exporters gained as the yen weakened, with Makita Corp. adding 0.7 percent. Japan Display Inc. jumped 1.1 percent after announcing it will build a factory to manufacture sixth-generation LCD panels.

The Topix index slid 0.6 percent to 1,531.76 at the close in Tokyo, paring last week’s 1.1 percent gain. All but four of its 33 industry groups fell. The Nikkei 225 Stock Average dropped 1 percent to 18,790.55. The yen lost 0.1 percent to 120.99 per dollar after weakening 0.6 percent on Friday as U.S. stocks slumped the most in two months after nonfarm payrolls rose more than projected and the jobless rate sank to a seven-year low.

“The massive drop in U.S. stocks is weighing more than the negative GDP revision,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo, which oversees about $857 million. In terms of the gross domestic product revision, “as long as exports are gaining, we should see a spiral where that leads to higher business spending.”

Japan GDP

Japan’s GDP expanded an annualized 1.5 percent in the fourth quarter, less than the 2.2 percent reported in a preliminary report last month, a government report showed.

Real-estate stocks declined, with Mitsubishi Estate slumping 2 percent to 2,698 yen, while Sumitomo Realty & Development Co. dropped 3.2 percent to 4,037.5 yen.

Exporters gained as the yen weakened. Makita, a maker of power tools that gets more than 82 percent of revenue overseas, added 0.7 percent to 6,030 yen. Bridgestone Corp., which makes tires, rose 0.6 percent to 4,716 yen.

NTT Docomo fell 1.5 percent to 2,209 yen after Mizuho downgraded the company to underperform from neutral. Other carriers also traded lower, with KDDI Corp. sinking 1.8 percent to 7,935 yen and Softbank Corp. sliding 1 percent to 7,005 yen.

Japan Display jumped 1.1 percent to 481 yen after announcing it will invest 170 billion yen ($1.4 billion) to build a facility in central Japan to produce sixth-generation LCD panels. The stock surged as much as 14 percent on Feb. 20 after Nikkan Kogyo reported the company would build a plant at Apple Inc.’s request.

U.S. Employment

U.S. stocks on Friday slumped the most in two months after U.S. employers added 295,000 jobs in February, more than the 235,000 estimated by economists. The unemployment rate fell to 5.5, within the range that the U.S. central bank considers full employment.

The Federal Reserve, which is set to review policy on March 18, has held fast to a pledge this year to be “patient” on increasing borrowing costs as the American recovery strengthens while economies from Europe to China continue to show signs of strain. Fed Chair Janet Yellen has said the timing of any rate increase will depend on economic data, particularly employment.

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying gauge dropped 1.4 percent on Friday.

(A previous version of this story corrected the rate of the currency.)