Japan Stocks Fall as Oil Drops, Fed Cites Global Risks

Japan Stocks Fall as Oil Drops, Fed Cites Global Risks

(Bloomberg) — Japanese stocks fell from a seven-week high after oil slumped below $45 a barrel and the Federal Reserve cited international risks to the U.S. economy.

Skymark Airlines Inc., Japan’s third-largest carrier which filed for bankruptcy protection after running short of cash, went untraded as offers to sell outnumbered buy orders. Komatsu Ltd. sank 8.7 percent after Nomura Holdings Inc. said the construction-equipment maker may miss full-year earnings estimates. Chugai Pharmaceutical Co. jumped 4.9 percent as Goldman Sachs Group Inc. boosted its share price target on the stock after the drugmaker reported earnings.

The Topix index lost 0.6 percent to 1,422.07 as of 1 p.m. in Tokyo, with about five shares falling for every three that rose. The Nikkei 225 Stock Average slipped 0.3 percent to 17,737.77. The yen weakened 0.4 percent to 117.96 per dollar after rising the past two days.

“Investors are negative on the Fed comments because they were hoping for more clarity on when they will raise rates, as proof that they see the U.S. recovery as a genuine one,” said Andrew Clarke, director of trading at Mirabaud Securities Asia Ltd. in Hong Kong. “Simply put, equity markets don’t want a sharp rise in interest rates, but equally, if there’s no guidance to when they may start to rise, it means the Fed can see problems such as disinflation creeping into the economy.”

 

Oil Glut

U.S. oil supplies climbed to the highest level in more than 30 years, exacerbating concerns over a global supply glut. The Fed said after a two-day meeting that it’s confronting divergent forces as it weighs the timing of the first U.S. rate increase since 2006. While boosting their assessment of the economy, officials said inflation will probably slow further.
“The risks surrounding international developments that the Fed mentions are things like a global economic slowdown or lower inflation as represented by cheaper oil, and geopolitical risks triggered by the fall in oil prices,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone.

A government report today showed Japanese retail sales fell 0.3 percent in December from a month earlier, matching economist estimates.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The underlying gauge dropped 1.4 percent as energy shares plunged and concern grew about weakness in multinational earnings.

Fed officials are weighing strong job gains that argue for tightening sooner, while inflation was held down by a drop in energy prices and cooling global growth provide grounds for delay.

West Texas Intermediate crude slid to $44.45 a barrel, its lowest settlement price since March 2009.
Skymark will be delisted on March 1, the Tokyo Stock Exchange said, after Japan’s third-largest carrier filed for bankruptcy protection. Skymark filed at the Tokyo District Court with 71 billion yen ($603 million) in liabilities, according to a statement, with President Shinichi Nishikubo standing down and Chief Financial Officer Masakazu Arimori taking on the role.

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