Japan Stock Futures Sink on U.S. Retail Sales; Honda, Sony Drop

By Masaki Kondo

Oct. 16 (Bloomberg) -- Japan's stock futures tumbled in Chicago as the biggest decline in U.S. retail sales in three years pointed to a deepening recession and diminished demand for Japanese-made goods.

U.S.-traded receipts of Honda Motor Co., which gets more than half its profit from North America, retreated 13 percent from the closing share price in Tokyo yesterday. Sony Corp., maker of the PlayStation 3 game machine, dived 12 percent.

``Market players are increasingly nervous that global economies will sink even further,'' Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. ``The slump in U.S. retail sales reignited those fears.''

Nikkei 225 Stock Average futures expiring in December closed at 8,465 in Chicago, 11 percent lower than 9,490 earlier in Osaka and down from 9,460 in Singapore. The Bank of New York Japan ADR Index, which tracks American depositary receipts of Japanese companies, sank 9.4 percent, the most on record.


Sales at U.S. retailers fell 1.2 percent in September, the most since August 2005 and extending a drop to a third month, the first time that's happened since 1992. The result coincided with the Federal Reserve's release of its Beige Book report, in which the Fed said economic activities weakened last month throughout the country with deteriorating sales of cars and retailing.

Yesterday, the Nikkei recovered from an intraday loss to climb 1.1 percent to 9,547.47. The broader Topix index slipped 0.1 percent to 955.51. In New York, the Standard & Poor's 500 Index had its steepest drop since the crash of 1987, almost erasing all the gains on Oct. 13, when the market climbed the most since the 1930s on speculation a U.S. government plan to support banks will ease the credit crisis.

Yen, Steelmakers

The yen appreciated to as much as 99.34 from 101.85 at the close of stock trading in Tokyo yesterday. A 1 yen change against the dollar alters Sony's annual operating profit by 4 billion yen ($40 million), the company said in May.

Nippon Steel Corp., the world's second-biggest maker of alloy, JFE Holdings Inc. and Kobe Steel Ltd. had their investment ratings cut to ``neutral'' from ``buy'' at UBS AG.

``In fiscal 2009, nationwide crude steel output should see the first full-blown correction since fiscal 1998 on deterioration in domestic and overseas supply and demand,'' UBS analyst Atsushi Yamaguchi wrote in a report yesterday. He slashed his 12-month price estimates on the three Japanese steelmakers by as much as 64 percent.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.