WSJ:Tokyo Shares End Down as Dollar Weakens, US Results Disappoint
By Brad Frischkorn
TOKYO--Tokyo stocks closed slightly lower Friday, as a weaker dollar and disappointing earnings results from bellwether U.S. companies kept investors jittery about bidding prices any higher.
The market lost ground early after a fall on Wall Street overnight following weaker-than-expected U.S. earnings reports from the likes of Goldman Sachs, Citigroup, and Intel Corp.
But some traders were more concerned about the currency market than business results, as the dollar weakened against the yen.
The Nikkei Stock Average dropped 12.74 points, or 0.1%, to 15,734.46, closing lower for the second straight week. The index lost 1.1% for the week, and is now down 3.4% for 2014.
As of the close of TSE trading at 0600 GMT, the greenback was changing hands at about Y104.29, well off its prior day mark of Y104.66.
A stronger dollar is generally better for Japanese exporters as it enables them to sell their products more cheaply overseas.
"Frankly, the state of U.S. corporate earnings isn't a major worry, as the scale of the misses and forecasts were generally not egregious," said Shinkin Asset Management fund manager Naoki Fujiwara. "The dollar had risen so rapidly from mid-November to the year-end that some consolidation was due. This overrides more fundamental issues pertinent to stock valuations."
Currency-sensitive shares bore the brunt of the selling Friday, with Tokyo Electron dropping 2.4%, TDK losing 1.7%, Honda Motor off 1.0% and tire maker Bridgestone shedding 0.9%.
Buying in recently sold real estate developer shares was brisk, but not enough to offset overall selling pressure. Mitsui Fudosan gained 0.9%, while Sumitomo Realty & Development added 1.4%.
Mr. Fujiwara also pointed out that the Nikkei Stock Average price-to-earnings multiple (now at 15.8 times) has fallen and now compares well with the corresponding figure of about 16.0 times for the S&P500. Tokyo shares are not therefore greatly overvalued on that basis, he said.
March Nikkei 225 futures closed up 0.2%, at 15,750 on the Osaka Securities Exchange.
