Japanese Stocks Fall as Nomura Plunges on Earnings, Oil Slumps

Updated on
  • Crude capped biggest two-day loss in almost seven years
  • Topix gives back most of its gains from BOJ stimulus action

Global Stocks Sell Off: What Happened to the QE Premium?

Japanese stocks fell, with the Topix index wiping out most of its gains from last week’s Bank of Japan stimulus boost, as tumbling oil prices drove a global equities selloff and brokerages slumped after Nomura Holdings Inc.’s earnings disappointed.

The Topix dropped 3.2 percent to 1,406.27 at the close in Tokyo, as investor jitters about the pace of global economic growth reversed a rally following the BOJ’s surprise decision on Friday to adopt negative interest rates. All but one of the 33 Topix industry groups fell, on volume 33 percent above the 30-day average. The Nikkei 225 Stock Average lost 3.2 percent to 17,191.25. The yen traded at 119.56 per dollar, strengthening for a third day.

“Since the BOJ cut last week, markets have been on edge, concerned that the global situation is considerably worse than initially envisaged and that global central banks will be unable to combat deflationary risks driven by plummeting oil prices,” Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note.

Brokerages led losses, with Nomura Holdings sliding 10 percent, its biggest decline in more than four years, after reporting a 49 percent drop in third-quarter profit. Denso Corp. sank 7.1 percent, the most since June 2013, after the autoparts maker cut its profit forecasts.

Energy explorers fell after crude oil capped an 11 percent plunge over two days on Tuesday in New York. The Topix Mining Index, which includes oil explorers such as Inpex Corp., has slumped 16 percent this year, tracking the rout in crude prices. Inpex dropped 1.6 percent and Japan Petroleum Exploration Ltd. lost 3.1 percent Wednesday.

Oil refiner JX Holdings Inc. gained 3.4 percent after saying it’ll maintain its dividend forecast even after forecasting a net loss.

The Topix fell into a bear market on Jan. 20, buffeted by concerns of a slowdown in China and the selloff in oil and other commodities. That prompted the BOJ to boost stimulus by introducing a negative interest rate on a portion of current accounts held by financial institutions at the central bank.

Oil Glut

Energy prices are crumbling as expanding U.S. stockpiles reinforce concern over a global oil glut. A Citigroup Economic Surprise Index shows data in Group of 10 economies are falling short of estimates by the most since May 2013, reinforcing concern over the global outlook amid heightened market volatility. The Nikkei 225 Volatility Index, based on options prices, soared 19 percent Wednesday, the most in a month.

“With the oil price falling, material-related companies in the steel sector or oil refining companies are being effected and this is bringing things down," Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo, said by phone. “Oil faces problems both on the demand and supply side.”

E-mini futures on the Standard & Poor’s 500 Index slipped 0.3 percent after the underlying U.S. measure dropped 1.9 percent on Tuesday. The Stoxx Europe 600 Index dropped 2.1 percent.

“Most people are rather positive about the Japanese market, just that there are global mitigating factors which seem to be in control at the moment,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “There’s not much ‘investing’ going on as people are too jittery and a trading mentality rules in most markets at the moment.”

Some 95 companies in the 1,934-member Topix report earnings Wednesday. Of the firms in the benchmark gauge that have posted results and for which Bloomberg has estimates, about half missed analyst predictions for profit.