Business / Financial Markets

Tokyo stocks drop further on dismal earnings results

Jiji

Tokyo stocks dropped further Wednesday, with investor sentiment hurt by a flurry of dismal earnings reports from major Japanese firms.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange fell 260.27 points, or 1.15 percent, to end at 22,397.11. On Tuesday, the key market gauge lost 58.47 points.

The Topix index of all TSE first-section issues finished down 20.08 points, or 1.28 percent, at 1,549.04. It sagged 7.57 points the previous day.

Selling to lock in profits hit a wide range of issues from the early morning following an overnight drop in U.S. equities.

Sentiment was chilled by worse-than-expected earnings reports announced by big names such as camera maker Canon and industrial robot producer Fanuc, brokers said.

The market accelerated its downswing in the afternoon, pressured by a stronger ¥ against the dollar and a fall in U.S. index futures in off-hours trading, the brokers said.

Yutaka Miura, senior technical analyst at Mizuho Securities Co., attributed the day’s fall to fears of a further slide on Wall Street later Wednesday.

The U.S. Federal Reserve’s policy-setting meeting through Wednesday “is expected to end without major surprises,” he said. “But the standoff over a new coronavirus stimulus package on Capitol Hill is feared to push down the U.S. market further.”

“Looking at the dismal earnings releases from some major manufacturers, foreign investors placed sell orders to reduce their holdings of Japanese shares,” another brokerage official said.

Weak business results “made investors realize again how severe the impact of the novel coronavirus is,” said a different securities house official.

Falling issues overwhelmed rising ones 1,810 to 309 in the TSE’s first section, while 53 issues were unchanged.

Volume increased to 1,186 million shares from Tuesday’s 1,088 million shares.

In addition to Canon and Fanuc, automaker Nissan, silicon wafer producer Shin-Etsu Chemical and restaurant chain Yoshinoya met with selling on their disappointing earnings reports.

Automaker Toyota, technology giant Sony and other export-oriented issues came under downward pressure due to the stronger yen.

Oil names including Eneos and Cosmo Energy lost ground against the backdrop of lower crude oil prices.

Among other losers were cosmetics maker Shiseido and job information service provider Recruit Holdings.

By contrast, control equipment maker Omron hit a listing-to-date high after announcing a better-than-expected operating profit for April-June.

Also on the positive side were technology investor SoftBank Group and clothing store chain Fast Retailing.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average fell 270 points to end at 22,340.

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