By Masaki Kondo and Satoshi Kawano
May 22 (Bloomberg) -- Japanese stocks fell as speculation the U.S. will lose its top credit rating lifted the value of Japan’s currency against the dollar.
Nissan Motor Co., which gets 40 percent of its sales from North America, retreated 2.5 percent as the yen appreciated beyond 94 per dollar for the first time in two months. Panasonic Corp., the world’s largest maker of plasma televisions, declined 2.6 percent after initial jobless claims in the U.S. exceeded economist estimates. Mitsubishi Corp., a trading company that gets more than half its profit from resources, fell 2.1 percent as commodity prices slid.
“Given we’ve seen some improvements in U.S. economic statistics, the deterioration of the job market is disappointing,” said Juichi Wako, a senior strategist at Nomura Holdings Inc., Japan’s top securities brokerage. “Employment reports indicate the future trend of consumer spending.”
The Nikkei 225 Stock Average declined 111.18, or 1.2 percent, to 9,152.97 as of 9:30 a.m. in Tokyo. The broader Topix index fell 11.91, or 1.4 percent, to 869.53. For the week, the Nikkei is set to lose 1.2 percent, while the Topix is poised for a 1.4 percent drop.
The Nikkei was up 4.6 percent on the year through yesterday, compared with a 1.7 percent decline in the Standard & Poor’s 500 Index. Companies on the Nikkei trade at 40 times their estimated net income for this fiscal year, making Japanese equities the most expensive among the world’s five biggest markets, according to Bloomberg data.
Credit Ratings
In New York, the S&P 500 Index slid 1.7 percent as a Labor Department report showed initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, while economists had expected claims would drop to 625,000.
Bill Gross, co-chief investment officer of Pacific Investment Management Co. said in a televised interview the U.S. will “eventually” lose its top AAA credit rating. Standard & Poor’s yesterday slashed its outlook on the U.K.’s AAA rating to “negative” from “stable,” citing swelling debt.
Nissan, Japan’s No. 3 automaker, slumped 2.5 percent to 545 yen, while Toyota Motor Corp., the world’s biggest automaker, dropped 2.5 percent to 3,560 yen. Panasonic retreated 2.6 percent to 1,298 yen. Makers of electronics and cars contributed the most to the Topix’s decline.
The Japanese currency strengthened to as low as 93.87 per dollar, a level not seen since March 19, from 94.56 at the close of Tokyo stock trading yesterday. Japanese large manufacturers anticipate the yen will trade at an average of 97.18 versus the dollar this fiscal year, the Bank of Japan’s Tankan quarterly survey showed last month.
No Intervention
The yen strengthened further after Finance Minister Kaoru Yosano told reporters today that Japan isn’t considering currency intervention.
Mitsubishi, the nation’s largest trading house by value, declined 2.1 percent to 1,704 yen. Mitsui & Co, No. 2, dropped 2.3 percent to 1,153 yen. Inpex Corp., Japan’s largest oil and gas explorer, lost 1.8 percent to 704,000 yen.
Crude oil for July delivery declined 1.6 percent to $61.05 a barrel in New York yesterday, the first drop this week. A gauge of six metals in London dropped 3.7 percent, the most since April 20.
Nikkei futures expiring in June retreated 1.4 percent to 9,150 in Osaka and slumped 1.5 percent to 9,155 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.
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