Japan Stocks Plunge on Their First Trading Day of 2019

(Bloomberg) -- Japanese stocks dropped on the first trading day of 2019, as Apple Inc.’s outlook cut and weak economic data from the U.S. and China intensified global growth concerns.

The blue-chip Nikkei 225 Stock Average slid nearly 3 percent, while the broader Topix index also fell sharply, with a group of electronics makers weighing the most. Japan resumed trading Friday after local markets were shut for four days for the New Year’s holiday.

American equities sank Thursday as weak ISM manufacturing data stoked recession fears and after Apple cut its revenue forecast, citing struggling iPhone sales in China. Factory numbers deteriorated in China as well, with the Caixin Media and IHS Markit PMI for December falling to 49.7, its lowest reading since May 2017. A gauge of Asian stocks excluding Japan fell for a third-straight day.

“Belief in global corporate earnings is fading against the backdrop of the U.S.-China trade friction,” said Nobuhiko Kuramochi, head of investment information at Mizuho Securities Co. in Tokyo. “Deteriorating Apple earnings will lead to volume cuts for suppliers including those in Japan, while it could also mean cost-cutting pressures.”

Apple supplier Murata Manufacturing Co. lost more than 10 percent and was among the biggest drags on the Topix Friday. TDK Corp. and Alps Alpine Co. each dropped at least 6 percent. China-linked factory automation and consumer goods names including Yaskawa Electric Corp. and Shiseido Co. were among the biggest decliners on the Nikkei 225.

The Topix tumbled 18 percent in 2018, its worst annual performance in seven years. That’s helped drive the gauge’s estimated price-to-earnings ratio for the next 12 months down to 10.9 times, the lowest level since July 2012. Still investors remain wary. The cost of hedging against declines in the Nikkei 225 Stock Average is near its highest level since February 2016, according to three-month options data.

Summary

• Topix -2% to 1,463.88 as of 10:52 a.m. in Tokyo
• Nikkei 225 -2.9% at 19,443.42
• Yen -0.2% at 107.91 per dollar after gaining 2.4% over Mon.-Thurs.
• Apple suppliers: Murata Manufacturing -10%, Alps Alpine -6.9%, TDK -6.1%
• Factory automation: Yaskawa -7.4%, Keyence -6.4%, SMC -5.4%
• Consumer goods: Shiseido -7.2%, Kose -6.1%, Pigeon -4.5%, Kao -3.7%
• Power companies outperform: Tepco +3.7%, Kansai Electric +3.6%

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