Japan's Nikkei fell on Thursday, with banking stocks sliding after disappointing earnings forecasts and losses in US financial shares. Selling in large market cap stocks such as SoftBank and Fanuc and underperformance in Apple suppliers also hurt the broader market.
The Nikkei share average ended 0.2 percent lower at 21,803.62. Analysts said investors were disappointed after Japanese mega banks which reported their second-quarter earnings on the previous day did not raise their annual forecasts. The broader Topix shed 0.1 percent to 1,638.97. The banking sector was the worst sectoral performer, tumbling 2.1 percent.
Sumitomo Mitsui Financial Group dropped 3.1 percent, while Mizuho Financial Group shed 1.7 percent. SMFG posted a 37 percent rise in its second-quarter net profit, but it kept its profit forecast at 700 billion yen for the year ending March, below the 751.9 billion yen average of 14 analyst estimates compiled by Refinitiv.
Mizuho reported flat growth in net profit in the three months through September, and kept its profit forecast at 570 billion yen, down 1.1 percent from the year prior but above the 567.1 billion yen average of 14 analyst estimates compiled by Refinitiv. A sell-off in the US financial sector overnight added to the market's dim mood.
US financial shares were hit by fears that regulations on the banking industry would tighten once the Democratic Party takes control of the US House of Representatives. "Japanese banks' earnings were unimpressive, while negative sentiment in the US financial sector was contagious," said Takuya Takahashi, a strategist at Daiwa Securities.
He said the market is now focused on the third-quarter earrings result by US chipmaker Nvidia Corp's later in the day, which is expected to report a rise in its quarterly revenue. "It's one of the companies which led the US market gains this year, and the result will become an indication of the chip industry's outlook which will also affect Japanese chip-related companies like Tokyo Electron and Advantest," Takahashi said.
Index-heavy SoftBank Group Corp declined 2.7 percent and Fanuc Ltd shed 1.9 percent, taking off a hefty 41 negative points from the Nikkei benchmark index. Apple suppliers were hit hard after the iPhone maker's stock dropped in the previous day, with Taiyo Yuden tumbling 4.8 percent and TDK Corp dropping 3.1 percent.
Bucking the weakness, Amada Holdings jumped 11 percent after the metal press products maker raised its operating profit forecast for the year through March to 43 billion yen from 40.5 billion yen. It also said it would buy back up to 10 billion of its own shares, or 2.73 percent of shares outstanding.