Japan Stocks Drop on U.S. Housing Slump; Toyota Poised to Fall

By Masaki Kondo and Shani Raja

Dec. 24 (Bloomberg) -- Japan’s stocks sank as plunging home prices in the U.S. stoked investor concern that the nation’s recession will deepen and curb demand for local exports.

Sony Corp., which gets a quarter of its sales from the U.S., lost 1.1 percent. Toyota Motor Corp., Japan’s biggest automaker, fell 3.5, after forecasting its first operating loss in 71 years. Denso Corp., partly owned by Toyota, was poised to retreat after reducing its earnings estimate by 90 percent.

The Nikkei 225 Stock Average retreated 131.26, or 1.5 percent, to 8,592.52 as of 9:15 a.m. in Tokyo. The broader Topix index fell 10.28, or 1.2 percent, to 838.44. Stocks in Japan resume trading today after a holiday yesterday.

“All the macro indicators are pointing to slowing growth globally,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “Most of the developed world is in recession and that’s destroying a lot of demand.”

Writedowns and credit losses at financial companies have swelled to $1 trillion globally as falling home prices in the U.S. reduce the value of securities backed by loan and mortgage payments. The bleak economic outlook discourages American consumers from buying Asian-made cars and electronics, which forced Toyota to revise its profit projection to a loss for this business year.

The median resale price of U.S. single-family houses dropped 13 percent last month, the most since the tally started in 1968 and likely the biggest since the 1930s, the National Association of Realtors said yesterday. A separate report from the Commerce Department showed sales of new homes fell to a 17- year low in November.

On Dec. 22, Toyota said it will post a 150 billion yen ($1.65 billion) operating loss in the year to March 31, reversing its forecast for 600 billion-yen profit. The company’s expected loss may prompt President Katsuaki Watanabe to step down next year, people familiar with the matter said.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.