Japan Stocks Fall in Final Minutes of Trading Before Fed Meeting

Jan 28, 2014 1:19 am ET

Jan. 28 (Bloomberg) -- Japanese stocks fell in the final 10 minutes of trading as declines among phone companies and raw- materials shares dragged the Topix index to the lowest level in six weeks.

KDDI Corp. dropped 3.1 percent after Credit Suisse AG cut its recommendation on Japan’s second-biggest mobile phone company. Hitachi Chemical Co. tumbled 3.1 percent after trimming its full-year profit target by 6.1 percent to 23 billion yen ($224 million). Kawasaki Heavy Industries Ltd. climbed 2 percent as JPMorgan Chase & Co. advised buying shares of the maker of industrial-machinery equipment.

The Topix fell 0.4 percent to 1,224.31 at the close in Tokyo, the lowest level since Dec. 16. The Nikkei 225 Stock Average slid 0.2 percent to 14,980.16. The yen, which touched a seven-week high yesterday before ending the day lower, fell 0.1 percent to 102.64 per dollar as the U.S. Federal Open Market Committee begins a two-day meeting today.

“Investors can’t move much until they see the policy statement of the FOMC meeting on Jan. 28-29 and the market’s reaction to it,” said Toshihiko Matsuno, a strategist at SMBC Friend Securities Co., a unit of the country’s second-largest lender. “The abrupt changes in developing markets are showing signs of settling down and the yen has stabilized. That should start buying back gradually.”

Yesterday’s slump pushed the Nikkei Stock Average Volatility Index up 21 percent, the biggest jump in eight months. The measure slid 1.2 percent today.

The Topix slid 6 percent this year amid concern that economic growth is slowing in China and as the U.S. central bank cuts stimulus, spurring demand for the yen as a haven.

Earnings Reports

More than 500 companies on the Topix report earnings this week, with about 640 filing results next week, according to data compiled by Bloomberg. Tiremaker JSR Corp. yesterday posted net income for last quarter that topped analyst estimates.

Hitachi Chemical sank 3.1 percent to 1,490 yen as the firm cut its forecast operating profit by 9.7 percent to 28 billion yen ($272 million), less than the 30.6 billion estimate of 17 analysts surveyed by Bloomberg.

The Topix jumped 51 percent in 2013 as Prime Minister Shinzo Abe and the Bank of Japan took steps to end 15 years of deflation.

Relative Value

The Japanese equity measure yesterday traded at 1.25 times the value of its net assets, compared with a book value of 2.56 for the Standard & Poor’s Index and 1.79 for the Stoxx Europe 600 Index. Futures on the S&P 500 rose 0.3 percent today after the equity gauge fell 0.5 yesterday to extend its worst weekly drop since June 2012.

Sony Corp. sank 2.7 percent to 1,665 yen, a third day of declines. Moody’s Investors Service cut its credit rating to junk as Japan’s biggest television maker struggles to capture consumer demand for smartphones and tablet computers.

KDDI Corp. dropped 3.1 percent to 5,781 yen after Credit Suisse cut its recommendation on Japan’s second-biggest mobile phone company.

Among shares that rose, Kawasaki Heavy gained 2 percent to 462 yen. JPMorgan upgraded its recommendation on the shares to overweight from neutral.

Daikin Industries Ltd., an air-conditioner manufacturer that counts China as its biggest overseas market, rose 2.1 percent to 6,060 yen after tumbling 3.7 percent yesterday. Fanuc Corp., which gets half of its sales in Asian countries outside Japan, climbed 0.6 percent to 16,880 yen.

--With assistance from Yoshiaki Nohara in Tokyo. Editors: John McCluskey, Sarah McDonald