Japanese Shares Retreat After Holidays as Exporters Drop on Yen

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Japanese stocks fell after markets reopened from holidays, with exporters declining as weak U.S. economic data sent the yen higher and investors weighed earnings.

Nissan Motor Co., which gets about 78 percent of revenue abroad, slumped 1.6 percent. Airlines sank the most among the 33 Topix industry groups after oil extended gains on Wednesday. Benesse Holdings Inc. plunged 18 percent after the provider of educational services forecast a wider loss. Dai-ichi Life Insurance Co. added 3.6 percent after its preliminary earnings report showed stronger-than-expected profit.

The Topix index, trading for the first time since May 1, slid 0.7 percent to 1,574.64 at the close in Tokyo. All but six industry groups declined. The Nikkei 225 Stock Average lost 1.2 percent to 19,291.99. The yen held three days of gains, trading at 119.42 per dollar after private data on U.S. employment missed estimates.

“The U.S. economy was expected to bottom out in March and recover in the second quarter, but so far the figures for April have been poor,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “Sentiment could sour even more depending on the April payrolls report. Risk-off moves could intensify if the U.S. economic situation is deemed weak, and that could easily send the yen to 117 per dollar.”

American employers added 169,000 workers in April, the fewest in more than a year, according to a report from the Roseland, New Jersey-based ADP Research Institute. The median forecast of 43 economists surveyed by Bloomberg was for an increase of 200,000.

The data comes ahead of Friday’s official jobs report, with economists expecting nonfarm payrolls to increase by 230,000 workers, rebounding from March’s reading of 126,000.

Yen, Crude

Exporters fell as the greenback slid for a fourth day against the yen. Nissan slumped 1.6 percent, while Toyota Motor Corp., which gets nearly a third of sales from North America, fell 1.2 percent.

Japan Airlines Co. dropped 3 percent as airlines fell on prospects for higher fuel costs. ANA Holdings Inc. tumbled 3.6 percent, its biggest decline since October.

Benesse dropped the most on record, losing 18 percent. The company, which operates schools and senior care homes, forecast operating profit will fall 54 percent to 13.5 billion yen in the current fiscal year. That compares with 31.5 billion yen estimated by analysts.

Insurers were second to utilities among the best-performing Topix groups after Dai-ichi reported preliminary earnings that showed net income grew to 142 billion yen, above its forecast for 80 billion yen. The company also increased its sales and profit forecast for the current fiscal year, citing a boost to investment income from favorable financial and economic conditions. Shares rose 3.6 percent to close at a record.

Earnings, Bonds

More than 320 companies on the Topix are scheduled to post earnings today and Friday, according to data compiled by Bloomberg. Nintendo Co. is among those reporting after the close today. Of 183 firms that have already filed quarterly results and for which estimates are available, 52 percent posted lower profit than predicted.

Japanese 10-year government bond futures headed for their steepest slump in three months amid a global rout in sovereign debt. Investors have dumped everything from German bunds to U.S. Treasuries as deflation risks subside and the prospect of interest-rate increases in the U.S. raises questions about the sustainability of record-low borrowing costs.

‘No Fundamental Change’

“The last time Japanese bonds sold off, in January, it was because of receding expectations of additional Bank of Japan stimulus,” said Akio Kato, Tokyo-based general manager of the trading department at Kokusai Asset Management. This time the sell-off is led by overseas bond markets, but “as there’s no fundamental change to the BOJ’s easing program or a chance they’ll reach their inflation goal soon, the sell-off will likely extend to about the same level as last time.”

E-mini futures on the Standard & Poor’s 500 Index fell less than 0.1 percent. The underlying measure dropped 0.5 percent on Wednesday in New York after a 1.2 percent slump the day before. Federal Reserve Chair Janet Yellen said Wednesday that stock valuations are “quite high.”