Japanese Stocks Drop on U.S. Jobs, Factory Orders; Nikon Falls

By Masaki Kondo

Oct. 5 (Bloomberg) -- Japanese stocks fell for a third day, led by companies reliant on overseas sales, after government reports showed the U.S. lost more jobs than estimated and factory orders unexpectedly declined.

Nikon Corp., a camera maker that counts North America as its biggest market by revenue, dropped 7 percent. Honda Motor Co., a carmaker that gets 47 percent of its sales in North America, lost 2.8 percent. Mitsui & Co., which relies on commodities as its biggest source of profit, dropped 3.4 percent after prices for oil and metals dropped. Inpex Corp., Japan’s largest oil explorer, retreated 2.8 percent.

The Nikkei 225 Stock Average fell 0.6 percent to 9,674.49 at the close in Tokyo. The broader Topix index slid 0.8 percent, with twice as many shares declining as advancing. Both gauges dropped for a third day. The Nikkei has risen 37 percent since March 10, when it fell to its lowest close since October 1982.

“The expectations of recovery that gave the market an extra boost have come apart,” said Masaru Hamasaki, a senior strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “Resource shares won’t rise until we see a vigorous recovery in demand.”

On Oct. 2, both the Nikkei and Topix capped their steepest weekly slump in almost three months after a Bank of Japan survey showed companies planned to further cut investment. The 25-day Toraku index, a measure of daily stock winners and losers in Tokyo, fell to 69.55 on Oct. 2, the lowest reading since October 2008. A level below 70 suggests stocks are close to hitting bottom, according to Nomura Holdings Inc.

U.S. Jobs, Orders

The Standard & Poor’s 500 Index lost 0.5 percent on Oct. 2 in New York. Payrolls dropped more than economists had estimated in September, a Labor Department report showed. Orders placed with U.S. factories fell 0.8 percent in August, the Commerce Department said, while economists had forecast orders would be unchanged.

Nikon, whose cameras have been used on Discovery space shuttles, slumped 7 percent to 1,442 yen and was the biggest loser on the Nikkei. Sony Corp., which gets 23 percent of its sales from the U.S., dropped 2 percent to 2,400 yen. Honda, Japan’s No. 2 carmaker, slid 2.8 percent to 2,595 yen. Makers of electronics and cars contributed the most to the Topix’s retreat.

Mitsui, Japan’s No. 2 trading house by market value, lost 3.4 percent to 1,086 yen. Crude oil declined 1.2 percent on Oct. 2, the most in a week. A gauge of six metals, including copper and nickel, fell 2 percent in London, adding to a 2.8 percent drop on the day before.

‘Short’ Inpex

Inpex sank 2.8 percent to 725,000 yen, its lowest close since Aug. 21.

“Shorters of oil will short the stock, strong buyers of oil will do the reverse,” Ben Wedmore, an analyst at MF Global FXA Securities Ltd., wrote in a report on Oct. 2. “For those who can, we recommend going long oil and short Inpex.” He rated the stock “sell” in his new coverage.

Short-sellers borrow securities and sell them in a bet that prices will fall, aiming to buy them back more cheaply and profit from the difference.

Nomura, Japan’s biggest brokerage, soared 11 percent to 592 yen and was the country’s most actively traded stock by value. The company said Sept. 24 it aims to raise a record 511.3 billion yen ($5.7 billion) in stock, and today marked the start of the three-day period during which it planned to set the price and number of shares to be sold.

“Some see Nomura as Japan’s only brokerage that can compete on the international stage. Those people buy the stock when it falls,” said Toyota Asset’s Hamasaki.

Banks Advance

Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, advanced 2.3 percent to 455 yen. Sumitomo Mitsui Financial Group Inc. added 2.9 percent to 3,050 yen. Banks as a group were the biggest positive contributors to the Topix.

Financial Services Minister Shizuka Kamei said on Sept. 15 that he would consider allowing small businesses to postpone repayment to lenders, causing bank shares to underperform the Topix since then. Kouhei Ohtsuka, deputy to Kamei, said on a TV program aired yesterday that they are “exerting efforts” to make the scheme “worry-free.”

“Investors see an increasing chance that a loan moratorium will be practical,” said Makoto Tatara, a strategist at Daiwa Securities Group Inc.

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