Nikkei posts biggest loss in four months

Japanese shares suffered their biggest loss in four months on Thursday on weak US growth figures and lacklustre earnings from Japanese companies including Honda Motor. The Nikkei share average fell 2.7 percent to 19,520.21 points while the broader Topix index shed 2.1 percent to 1,592.79 in the second heaviest turnover so far this year.
"Hedge funds bought Japanese stock futures in February and March but they are unwinding their positions globally, such as buying in European shares and selling in the euro. Their selling should be considered in this context," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Their unwinding is unlikely to end in a day or two," he added. Japanese shares have attracted investors so far this year due to a number of factors including monetary stimulus in Japan and Europe as well as hopes for solid growth in Japanese corporate earnings and higher shareholder returns. As a result, the Topix has risen more than 10 percent so far this year, outperforming US markets and posting the second biggest gains in Asia after China.
But surprisingly soft US GDP data provided players with reasons to lock in gains for now, given the picture for the Japanese economy rests on the assumption that all is well with the US economy, Japan's biggest export market. "The outlook for the US economy and monetary policy looks uncertain. Even considering that bad weather and port strikes in the West Coast played a role, it is questionable if the US growth is strong enough to allow a rate hike even by the end of year," said Takashi Hiroki, chief strategist at Monex Securities.
Honda Motor fell 6.7 percent after it forecast only a scant 0.4 percent rise in net profit for the current financial year to March. NTT Docomo dropped 6.1 percent as its profit guidance - of 6.4 percent operating profit growth in 2015/16 - failed to excite investors. Some domestic-demand oriented companies, major driver of this year's rally, also saw sharp falls after earnings. Oriental Land, the operator of Tokyo Disney Land, fell 5.2 percent, while Yamazaki Baking fell 9.7 percent. Takeda Pharmaceutical, Japan's biggest drugmaker by market cap, dropped 3.0 percent after it reported its first annual loss in history to take charges for settlement costs of a lawsuit related to its diabetes drugs in the United States.