July 25, 2012 / 6:40 AM / 5 years ago

Nikkei sheds 1.4 pct to 7-wk closing low on US earnings

 * Toshiba sags 7.3 pct on weak Apple earnings, production
cut
 * Softbank, Japan Tobacco up as defensives in demand
 * Some investors also buy Nikkei Aug put options at 8,000
 By Dominic Lau
 TOKYO, July 25 (Reuters) - The Nikkei share average fell 1.4
percent on Wednesday to a seven-week closing low after
disappointing results from Apple Inc results hit the iPhone
maker's Japanese suppliers, while printer makers fell after
Lexmark International cut its outlook.
 Worries about slowing global growth and the deepening euro
zone sovereign debt crisis have bitten into U.S. and Japanese
corporate earnings. Of 26 U.S. firms that have revised
third-quarter profit forecasts since mid-June, 19 have cut them,
according to Thomson Reuters I/B/E/S. 
 The Nikkei dropped 122.19 points to 8,365.90, edging
closer to its June 4 low of 8,238.96. The benchmark has fallen 7
percent so far this month, and is down 1 percent this year.
 A senior trader said investors were picking up Nikkei put
options at 8,000 with August expiry to hedge
against further declines.
 "There's really nothing to support the market at the moment
and it looks like it will sink right through June's lows without
any trouble," said Hiroyuki Mutsuro, head of execution support
at Mizuho Securities.
 "Demand has really cooled in Europe and even firms that have
done well on domestic consumption are going to find it hard to
maintain their share prices."
 Toshiba Corp slumped 7.3 percent to a 40-month low
after Apple posted worse-than-expected quarterly
results and the Japanese company said on Tuesday that it would
cut memory chip production by 30 percent.
 Panasonic Corp, another Apple supplier, sagged 5.5
percent to a 32-year low. 
 Other Apple contractors to suffer included Murata
Manufacturing Co Ltd, Foster Electric Co Ltd,
Ibiden Co Ltd, Seiko Epson Corp and Taiyo
Yuden Co Ltd, down between 4.2 and 7.5 percent.
 The broader Topix shed 1.6 percent to 706.46.
Trading volume hit a two-week high, with 1.78 billion shares
changing hands, up from 1.64 billion on Tuesday and 1.41 billion
on Monday. 
 "The sellers that we seeing were primary long-only," another
senior dealer at a foreign bank said, adding that domestic
investors bought at around these levels when the Japanese
markets bounced on June 4.
 "The things that are different this time, though ... the
currency is a lot stronger than it was last time, Europe is in a
lot worse shape than it was last time and the BOJ, when they are
stepping into the market, are buying a much smaller size," he
said.
 "I would say those things conspire to open the path lower."
 With the recent sell-off, the Topix's 12-month forward
price-to-earnings ratio slipped to 0.84 to a month low, data
from Thomson Reuters Datastream showed.
 Japanese firms' one-month earnings momentum -- analysts'
earnings upgrades minus downgrades as a total of estimates --
worsened to -4.8 percent from a fall of 2.3 percent last month,
Datastream data showed.
 That still fared better than the outlook for S&P 500 
companies as their earnings momentum deteriorated to -18.4
percent from a fall of 8.4 percent in June.
 
 CANON, RICOH FALL
 Japanese printer makers came under pressure after U.S. peer
Lexmark reported weaker-than-expected quarterly results
on a drop in demand in Europe and a strong dollar, and the
company cut its full-year forecast. 
 Ricoh Co Ltd dropped 5.5 percent, while Konica
Minolta Holdings Inc lost 4.3 percent and Canon Inc
 fell 0.9 percent.
 After the bell, Canon cut its full-year operating profit
outlook to 390 billion yen ($4.99 billion) from a previously
forecast 450 billion yen, buffeted by a euro zone crisis which
sent the yen climbing while sapping demand for a key export
market. 
 However, Japan Tobacco Inc advanced 1 percent as
investors sought refuge in defensive shares and after Morgan
Stanley MUFG lifted the price target of the Japanese company.
 Softbank Corp climbed 4 percent, and was the
heaviest traded stock on the main board, after Bank of America
Merrill Lynch upgraded its rating on the mobile operator to
"buy" from "neutral", saying it was the fastest growing among
wireless firms and its capex would decline the most in the next
two years.
($1 = 78.2200 Japanese yen)

 (Editing by Kim Coghill)
 

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