Most Asian stocks fell ahead of a planned briefing by the US government on the stalemate in raising the nation's debt limit that's needed to avert a default. Nintendo, maker of the Wii computer-games console, plunged the most in 20 years after slashing it profit forecast.
Sony, a Japanese exporter of consumer electronics, dropped 2.5 per cent after cutting profit forecasts.
Nintendo fell 20 per cent after announcing its forecast cut and discounting devices. Taiwan Semiconductor Manufacturing, the chipmaker, dropped 1.6 per cent in Taipei after posting its first profit decline in almost two years. East Japan Railway, the nation's largest train operator by sales, advanced 1.9 per cent after raising its net income guidance.
The MSCI Asia Pacific Index dropped 0.3 per cent to 137.21 in Tokyo. About five shares fell for every three that rose on the gauge. The measure is headed for a decline this week as forecasts for higher earnings at companies from Canon to Baidu were overshadowed by concern the US may default on its debt if lawmakers can't reach an agreement on raising the government's borrowing limit by August 2.
“Eventually lawmakers will probably compromise to reach an agreement on raising the debt limit, but now it's hard to see it,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings. “Investors are worried about the impact on the US economy.”
Monthly advance
The MSCI Asia Pacific Index is on course for a 1.6 per cent advance in July, its first such gain in three months.
Japan's Nikkei 225 Stock Average swung between gains and losses, while the broader Topix index declined 0.3 per cent. South Korea's Kospi index, Australia's S&P/ASX 200 Index and Hong Kong's Hang Seng Index dropped 0.3 per cent.
Futures on the Standard & Poor's 500 Index retreated 0.1 per cent today. The index slid 0.3 per cent yesterday in New York.
Equities fell, the dollar dropped and the yen strengthened amid a deadlock as Republicans and Democrats continued their spat over plans to raise the US debt ceiling. The Obama administration officials will brief the public on priorities for paying the nation's bills if the US debt limit isn't raised, a Democratic Party official said in an e-mail yesterday.
Earnings forecasts disappoint
Shares fell today as downgrades to the profit outlooks of major Japanese companies overshadowed the fact that more companies reported better-than-estimated first-quarter earnings than those that missed, according to data compiled by Bloomberg.
Sony dropped 2.5 per cent to 1963 yen in Tokyo, while Nintendo plunged 20 per cent to 11,150 yen in Osaka. They were among the biggest drags on the MSCI Asia Pacific Index.
Sony cut its annual profit forecast to 60 billion yen ($705 million) from its previous projection of 80 billion yen after a slump in demand in the US and Europe led the company to lower its estimate for television sales.
Nintendo, the biggest decline on the MSCI Asia Pacific Index and the biggest drag, said a lack of demand for its new 3- D handheld player led the company to slash the product's price and earnings forecasts by 82 per cent.
Taiwan Semiconductor Manufacturing slumped 1.6 per cent to $NT71.8 after saying second-quarter net income fell 11 per cent to $NT36 billion (US1.3 billion), from $NT40.3 billion a year earlier.
Among stocks that gained, Shinsei Bank, the Japanese lender, advanced 6.7 per cent to 95 yen after posting a 31 per cent jump in net income. The stock was the second-biggest gain on the MSCI Asia Pacific Index.
Samsung, Japan Tobacco
Samsung, the South Korean television maker, climbed 0.5 per cent to 841,000 won after reporting net income that beat analysts' estimates.
Japan Tobacco, the third-biggest support to the MSCI Asia Pacific Index, gained 4.4 per cent to 349,000 yen after saying profit may increase 11 per cent this fiscal year after raising prices in overseas markets.
Of 158 companies in the MSCI Asia Pacific Index that have reported net income since July 11, 73 have exceeded analysts' estimates while 65 have fallen short, according to data compiled by Bloomberg. Overall, earnings have declined 19 per cent, the data show.
The MSCI Asia Pacific Index fell less than 0.1 per cent this year through yesterday, compared with a gain of 3.4 per cent by the S&P 500 and a drop of 3.2 per cent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.5 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.9 times for the Stoxx 600.