Earnings Speculation Dominates Japan Stocks as Astellas Gains

  • Astellas leads advance among drugmakers on profit expectation
  • Nintendo falls for second day after new console disappointment

Earnings speculation underpinned the biggest moves in Japan’s stock market, which advanced Monday, with Astellas Pharma Inc. rising and Nintendo Co. sinking ahead of results due this week.

The Topix index climbed 0.2 percent at the close in Tokyo after spending the day fluctuating in a narrow range. About two shares rose for every one that fell. Investors are shifting their focus to earnings to gauge Japan Inc.’s health, with more than 350 companies on the Topix set to report this week, including precision-motor maker Nidec Corp. on Monday. Trading volume was subdued, with the lowest value of shares changing hands since May.

“We’re lacking a clear sense of direction as more and more shares move on earnings,” said Tomoichiro Kubota, a senior analyst at Matsui Securities Co. in Tokyo. “It’s difficult to say exactly how much effect it’ll have on the overall market, but this week we’ll keep being shaken this way and that by individual earnings.”

SecurityPercent ChangePrice
Topix+0.2%1,367.61
Nikkei 225+0.3%17,234.42
Yen-Dollar-0.1%103.85

Nintendo slid 4.8 percent, weighing the most on the Topix and extending Friday’s bout of selling, after the Nikkei newspaper reported the group is likely to post around a 5 billion yen ($48 million) operating loss for the first half of the fiscal year, against a 3 billion yen gain estimated by analysts. The shares tumbled 6.6 percent on Friday after unveiling a new gaming platform that failed to impress investors. Nintendo is due to report on Thursday.

Drugmakers led the advance on the Topix as Astellas rose 3.5 percent. The Nikkei newspaper reported first-half operating profit for the pharmaceutical company increased 20 percent to 160 billion yen. The U.S. Food and Drug Administration also approved updated product labeling for the company’s cancer drug Xtandi to include new clinical data showing more effectiveness compared with alternative treatment bicalutamide.

Among other movers:

  • Fukui Computer Holdings Inc. climbed 2.9 percent after reporting preliminary operating profit for the first half of the year that beat forecasts.
  • Taisei Corp. added 1.9 percent after it reported operating profit for the first half of the fiscal year was 50 percent better than the construction company previously forecast.
  • Toho Co. lost 2.7 percent after Mitsubishi UFJ Morgan Stanley Securities Co. downgraded the movie producer’s rating to neutral from overweight, saying operating profit will shrink next year after reaching a record in the year ending February. 
  • H2O Retailing Corp. tumbled 3.5 percent after the department-store operator reported a cut in operating profit, current profit and revenue forecasts.
  • Oil explorer Inpex Corp. slid 1.5 percent, tracking crude’s price decline on Monday. Iraq balked at joining efforts to trim output to prop up prices.
  • Bank shares were the biggest drag on the Topix as a group after gaining for six trading days, with Mitsubishi UFJ Financial Group Inc. dropping 0.7 percent.

“Earnings are slightly leaning toward a downwards revision of fiscal-year profit forecasts, but depending on changes to currency premises going forward, we could see improvements,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “We need to keep watching individual results carefully.”

Japanese shares are the second-worst performers among developed markets this year, with the Topix falling 12 percent as the yen strengthened 14 percent against the dollar. The declines are reversing a trend that had boosted the market in the initial years of Prime Minister Shinzo Abe’s term, which began in December 2012. The benchmark equity gauge is recovering some of its losses this month, rising 3.4 percent after slipping 0.5 percent in September.

Futures on the S&P 500 Index were 0.1 percent higher. The underlying equity gauge was little changed Friday, paring losses of as much as 0.5 percent amid deal talks, while Microsoft Corp. surged to a record after its earnings topped estimates.

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