Japan Stocks Fall First Time in Five Days Ahead of Earnings, BOJ

  • Some 21 companies on the Topix report earnings Monday
  • Telecommunication shares lead falls in Japanese shares

Shares in Tokyo fell for the first time in five days as companies reported earnings and investors awaited central bank policy decisions in the U.S. and Japan.

The Topix index slid 0.4 percent to 1,401.83 at the close in Tokyo. The measure capped its second weekly advance on Friday to close at its highest level since Feb. 2. The Nikkei 225 Stock Average slipped 0.8 percent to 17,439.30 on Monday. The yen traded at 111.12 per dollar after losing 2.1 percent on Friday, the most since October 2014, following a Bloomberg report the Bank of Japan is considering steps to provide relief to financial institutions.

“We have a lot of important events coming up, and many corporate earnings releases this week,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “We’d risen quite a bit last week, and with share prices closing in on the highs we had around the start of February, we’re seeing some profit-taking.”

Some 21 companies on the Topix report earnings Monday, including precision-motor maker Nidec Corp. and online brokerage kabu.com Securities Co. Masahiro Suzuki, an analyst at Daiwa Securities Group Inc., says earnings, which probably posted double-digit growth last quarter, will fall by almost 10 percent in the three months ending June.

Sony, Quake

All but seven of the Topix’s 33 industry groups fell, led by paper makers and telecommunication stocks. Sony Corp. dropped 6 percent after the electronics maker said it won’t give full-year forecasts when it reports earnings on April 28, while it assesses the damage from an earthquake that shut its main plant for camera sensors. The company said it doesn’t know when its Kumamoto facility will resume operations.

H.I.S. Co. sank 6.4 percent after the travel agency cut its forecast for first half operational profit by 25 percent to 8.3 billion yen. The company now sees a net loss when it previously saw a profit. Toyota Motor Corp. climbed 1.2 percent, the biggest boost to the Topix. The mobile communication service provider KDDI Corp. sank 4.1 percent, the largest drag on the Topix, while Nippon Telegraph & Telephone Corp. slumped 3.1 percent.

The Federal Reserve and the Bank of Japan meet later this week. Traders expect no action from the U.S. this time, while they see a 20 percent chance of a rate hike at the Fed’s June meeting. Twenty-three of 41 analysts surveyed by Bloomberg expect the BOJ to expand stimulus on April 28. Japan’s consumer prices and retail sales data for March will also be released Thursday.

Topix Rebound

The Topix has rebounded 18 percent from its Feb. 12 low through Friday, close to the 20 percent level that would signal a bull market. Gains have been bolstered by a recovery in oil prices, signs of stabilization in China’s economy and expectations the BOJ will continue efforts to support growth.

Investors are locking in profits after stocks appreciated rapidly, said Mitsuo Shimizu, an equity strategist at Japan Asia Securities Group in Tokyo. Still, “there’s a higher possibility of the BOJ easing monetary policy further. Those who hadn’t expected that continue to wind back their positions.”

An increasing number of officials at the BOJ consider it’s time for the government to do more to spur economic expansion, Bloomberg reported on Monday, citing people familiar with discussions at the central bank. While most of the officials are concerned that the Abe administration needs to accelerate reforms to raise Japan’s potential growth rate, some also suggest more fiscal spending would help.

Futures on the Standard & Poor’s 500 Index fell 0.1 percent after the underlying U.S. equity gauge closed little changed on Friday. The Nasdaq 100 Stock Index fell the most in two weeks as disappointing earnings pummeled shares of Microsoft Corp. and Google parent Alphabet Inc.

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