Japanese Stocks Drop as Commodity Slump Overshadows GDP Databy and
Japan’s stocks fell as a rout in oil and commodity prices dragged energy and material shares lower, outweighing a report showing the nation’s economy avoided a recession.
The Topix index dropped 1 percent at the close in Tokyo, with miners and oil and coal producers leading declines. The Nikkei 225 Stock Average also lost 1 percent. Energy explorer Inpex Corp. sank 5 percent, the most since January, as crude held near a six-year low below $38 a barrel. Japan’s economy expanded an annualized 1 percent in the third quarter, according to figures published on Tuesday, after an earlier reading had shown a second straight quarterly contraction.
Slumping resource prices “are beginning to show up in the credit risk of major, global commodity companies, and even countries,” said Norihiro Fujito, general manager of Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “As more people become aware of the implications, that could lead to a sudden risk-off period. And today we’re seeing some positioning to prepare for such a scenario.”
E-mini futures on the Standard & Poor’s 500 Index slipped 0.4 percent after the underlying measure lost 0.7 percent on Monday, with U.S. Steel Corp. sinking 8.8 percent after Fitch cut its credit rating on the steel producer. Copper producer Freeport-McMoran Inc. tumbled 7.9 percent to a 13-year low as its one-year default risk surged to the highest since 2008, according to Bloomberg data.
Oil has slumped more than 40 percent since Saudi Arabia led the Organization of Petroleum Exporting Countries’ decision last year to maintain output and defend market share against higher-cost U.S. shale producers. Members set aside their output quota on Friday until they gather again in June.
Energy shares and other commodity-related stocks led declines among the Topix’s 33 industry groups. Oil refiner JX Holdings Inc. lost 3.8 percent, while JGC Corp., which provides services to energy firms, slumped 5.8 percent. Sumitomo Metal Mining Co. dropped 2.6 percent.
Airlines, which stand to benefit from cheaper fuel costs, were one of the few standouts, with ANA Holdings Inc. climbing 2.3 percent while Japan Airlines Co. added 1.4 percent.
The 1 percent increase in Japan’s third-quarter annualized GDP compared with a preliminary figure that had indicated a 0.8 percent drop, data from the Cabinet Office showed Tuesday. Economists, who changed their forecasts after surprisingly strong capital expenditure numbers last week, had expected an increase of 0.2 percent.
The revision is good news for Prime Minister Shinzo Abe, who has made reviving the economy a priority for his administration, although growth continues to lag behind record corporate profits and rising share prices. The government is still expected to compile an extra fiscal spending package this month after the Bank of Japan in 2015 refrained from adding to its record monetary stimulus program.
“This is still a pretty big revision,” even taking into account a strong capital-expenditure report from last week, said Yoshito Sakakibara, an economist at JPMorgan Chase & Co.’s asset-management unit in Tokyo. “Given the size of the revision and that capital spending is robust, today foreign investors got exactly what they were looking for and this can be taken as a positive."
Asahi Kasei Corp. lost 2.6 percent after the subcontractor at the center of a building scandal said home orders dropped 16 percent in November from a year earlier.
Pigeon Corp. sank 5 percent after saying third-quarter sales in China and Hong Kong fell by a third due to inventory adjustments. Through Monday, the maker of baby care goods had rallied 9.9 percent since China on Oct. 29 announced the end of its one-child policy.
The yen strengthened for the first day in three against the dollar, rising 0.2 percent to 123.12. China’s exports fell for a fifth month and a slump in imports extended to a record 13 months as trade slows along with the world’s second-largest economy.