Japanese Stocks Decline for a Second Day as Global Rally Falters

Updated on
  • Mining stocks lead world index lower on China demand concerns
  • Iron and steel producers post biggest loss on Topix index

Japanese stocks fell for a second day as a global equities rally faltered amid concern over China’s economy. Iron and steel producers led losses.

Oil explorer Inpex Corp. lost 2.7 percent as crude traded near a one-week low. Nikon Corp. dropped 5.3 percent after a report the camera maker will post a 27 percent drop in operating profit in the six months ended September. Silicon wafer maker Sumco Corp. slumped 7.7 percent after Mizuho Financial Group Inc. cut its share price target. Movie producer Toho Co. gained 3.9 percent, the most on the Nikkei 225 Stock Average, after boosting its operating profit forecast.

The Topix index dropped 2.2 percent to 1,470.83 at the close in Tokyo, with about nine shares falling for each that rose. The Nikkei 225 declined 1.9 percent to 17,891. The yen traded at 119.69 per dollar after strengthening for the past two days. Commodity-related stocks led the MSCI All-Country World Index lower for a second day, following nine days of gains, after data on Tuesday showed Chinese imports fell for an 11th straight month.

“Investors are worried the recent bounce in commodity and equity markets is just a dead-cat bounce,” said David Welch, head of equity sales trading at Reorient Group in Hong Kong. “Global growth concerns are back on the forefront of investors minds.”

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying gauge fell 0.7 percent on Tuesday, halting a four-day rally that had driven it to the highest level since August. Oil held below $47 a barrel, while copper and nickel prices fluctuated.

Iron and steel producers led decline as all but one of the 33 industry groups on the Topix fell. Steelmaker JFE Holdings dropped 5.2 percent. Oil explorers Inpex sank 2.7 percent and Japan Drilling Co. lost 1.9 percent before U.S. government data forecast to show crude stockpiles expanded in the world’s biggest consumer.

Nikon lost 5.3 percent, the most since May 15. Operating profit likely fell to 9.5 billion yen in the April-September period as digital camera sales in the U.S. missed expectations, the Nikkei newspaper reported.

Sumco tumbled 7.7 percent, leading declines on the Nikkei 225. Its 12-month share price target was reduced 12 percent by Mizuho, which kept its underperform rating on the stock.

Toho jumped 3.9 percent after the movie producer raised its operating profit forecast for the year by 9 percent to 35 billion yen, beating analyst estimates for 33 billion yen.

Fed Liftoff

Investor sentiment will also likely continue to hinge on the Federal Reserve’s policy path. Traders are now pricing in a 36 percent chance of a rate liftoff by December, down from odds as high as 75 percent before China’s surprise currency devaluation in August, while there’s a 59 percent probability of an increase by March, according to data compiled by Bloomberg.

Japan’s producer prices fell 3.9 percent form a year earlier, its sixth straight decline, data from the Bank of Japan showed Wednesday. Prices for exports dropped 6.6 percent while import costs slumped 21 percent last month.

“With a lack of domestic earnings and economic indicators, investors don’t have enough reasons to buy stocks today,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “With less buying, the market will be pushed lower by small lots of asset liquidation.”

— With assistance by Yuko Takeo

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