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Nikkei slides as corporate scorecards disappoint

JIJI

Stocks lost further ground Thursday, dragged down by selling after earnings reports from major Japanese companies fell short of market expectations.

The 225-issue Nikkei average closed down 168.35 points, or 1.14 percent, at 14,562.93. On Wednesday, the key market gauge sagged 47.23 points. The Topix index of all first-section issues lost 17.60 points, or 1.44 percent, to end at 1,202.32, after falling 2.80 points the previous day.

After opening slightly higher, the key indexes soon fell into negative territory, pressured by profit-taking, brokers said.

Investor sentiment was hurt by Canon’s plunge, a day after the camera maker revised down its earnings projection for the year to December.

Stock prices accelerated their downswing in the afternoon session, led by speculative selling on index futures, brokers said.

Market players were also disappointed by a weaker-than-expected earnings report from silicon wafer manufacturer Shin-Etsu Chemical.

Plunges in heavily weighted components of the Nikkei average, such as mobile carriers Softbank and KDDI, also weighed down the Tokyo market.

“Worse-than-expected earnings reports from Canon and Shin-Etsu Chemical cast a shadow on other key companies’ earnings reports,” which are mostly due out next week, said Kenichi Hirano, adviser and market analyst at Tachibana Securities Co.

Hopes for brisk earnings reports from export-oriented companies on the back of the yen’s weakness have shrunk, an official at a medium-size brokerage said.

“Investors find it impossible to step up purchases before they see all other major corporate scorecards,” Hirano said. “As there is no reason to buy at present, they cannot but sell amid a sense of market overheating. The current phase of correction is expected to continue until the end of July.”

Falling issues far outnumbered rising ones 1,350 to 305 in the TSE’s first section, while 99 issues were unchanged. Volume increased to 2.227 billion shares from Wednesday’s 2.118 billion.

T-bill slide hits JGBs

Japanese government bonds fell back Thursday, pressured by weaker U.S. Treasuries and selling after the day’s auction of new 20-year JGBs.

The lead September futures contract on 10-year JGBs closed 0.26 point off at 143.53, marking the first decline in seven sessions. Volume rose to 23,218 contracts.