Topix Drops Most in Two Months as U.S. Growth Concern Weighs on Exporters

Japanese stocks fell, with the Topix index set for its biggest drop since March, after U.S. consumer spending slowed and incomes unexpectedly dropped in the world’s biggest economy, damping the earnings outlook for Asia’s exporters.

Toyota Motor Corp. (7203), which counts North America as its largest market, slipped 3.3 percent. Canon Inc., the world’s biggest camera-maker, slid 3.2 percent. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender by market value, fell 4.2 percent. Mitsubishi Corp., the country’s top trading company, lost 6.2 percent after oil and metal prices slumped. Mitsui O.S.K. Lines Ltd. dropped 7 percent after reporting a loss.

The Topix lost 3.1 percent to 737.50 as of 12:37 p.m. in Tokyo, headed for its steepest decline since March 15. The Nikkei 225 (NKY) Stock Average fell 2.5 percent to 8,484.86. The measure tumbled 11 percent last quarter, its worst performance since the three months ended June 2010, amid concern the U.S. economy is slowing and Europe’s debt crisis will spill over into the banking system.
“Sentiment has gotten so bad that easily responds to any sort of negative news,” said Ayako Sera, a market strategist in Tokyo at Sumitomo Trust & Banking Co., which manages the equivalent of $323 billion. “There’s concern that overseas demand will shrink. So stocks sensitive to the global economy are declining.”

S&P Futures

Futures on the Standard & Poor’s 500 Index fell 0.6 percent today. The index fell 2.5 percent on Sept. 30 in New York, sending the measure to its biggest quarterly drop since 2008, after reports from China and Germany fueled concern the global economy is slowing.

Consumer spending in the U.S. slowed in August as incomes unexpectedly dropped for the first time in almost two years. Purchases rose 0.2 percent after a 0.7 percent increase in July, Commerce Department figures showed on Sept. 30. Economists had forecast incomes would rise 0.1 percent, according to a Bloomberg survey.
Toyota, the world’s biggest carmaker, fell 3.3 percent to 2,600 yen. Mitsubishi UFJ Financial lost 4.2 percent to 339 yen. The two companies were the biggest drags on the Topix index.

Canon, which receives about 81 percent of its sales from overseas, dropped 3.2 percent to 3,435 yen.

Eyes on America

Japanese stocks fell even after a report today showed the quarterly Tankan index of sentiment at large manufacturers rose to 2 in September from minus 9 in June, matching the median estimate of 23 economists surveyed by Bloomberg News. A positive number means optimists outnumber pessimists.
“The Tankan results were in-line with expectations, so it’s not really affecting stocks,” said Sumitomo Trust’s Sera. “Stocks are reacting more to what happened in America.”

Japanese trading companies extended last week’s declines after the price of oil and metals deepened losses. The Topix Wholesale Trade Index lost 5 percent after tumbling 3.4 percent last week.

Mitsubishi Corp., which gets about 43 percent of its revenue from commodities, lost 6.2 percent to 1,494 yen. Smaller Mitsui & Co. slumped 7.3 percent to 1,051 yen. Inpex Corp., Japan’s No. 1 energy explorer, dropped 3.5 percent to 467,000 yen.

Oil fell today from a one year-low in New York, extending declines after the worst quarter since 2008. Crude for November slid as much as 1.6 percent in electronic trading in New York. Prices on the London Metal Exchange fell 3.4 percent on Sept. 30.

Mitsui O.S.K. led shipping companies lower after reporting that profit fell. Japan’s second-biggest shipper fell 7 percent to 279 yen, headed for its lowest close since March 2003. The company’s lost 17 billion yen in the six months ended Sept. 30, missing a profit forecast of 1 billion yen, according to a preliminary earnings statement that cited a decline in freight rates and a stronger yen.(Bloomberg)