Roundup: Nikkei tumbles 2.69 percent on weak U.S. GDP data, no fresh easing from BOJ

The Nikkei stock index tumbled 2.69 percent on Thursday to a near four-month closing low and biggest one-day loss in more than a year as poor GDP data from the United States and the Bank of Japan's decision to hold off on further monetary easing contributed to a dour market mood.

The Nikkei 225 stock average dropped 538.94 points to close the day at 19,520.01, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 34.64 points, or 2. 13 percent, to end at 1,592.79.

Local brokers here said that the market got off to a poor start following the U.S. Commerce Department announcing that the world' s largest economy grew between January and March at an annualized rate of just 0.2 percent, owing to sluggish exports and diminished consumer spending.

The latest reading came in well below median economists' expectations and follows an expansion of 2.2 percent in the final three months of 2014, which contributed to overall growth of 2.4 percent for the year. "The outlook for the U.S. 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 U.S. growth is strong enough to allow a rate hike even by the end of year," said Takashi Hiroki, chief strategist at Monex Securities.

Other analysts pointed to the U.S. Federal Reserve lowering of its view of both the U.S. labour market and economy on Wednesday, prompting investors to lock in gains and adopt a risk-on stance, as the timing of the Fed's expected hike of its key interest rate remains up in the air.

The Bank of Japan on Thursday also opted to stay pat on its monetary easing policy of expanding the monetary base at an annual pace of 80 trillion yen (about 672 billion U.S. dollars), despite inflation here grinded to a halt, adding to a circumspect mood.

The decision baffled some investors who were hopeful the central bank might boost its stimulus measures to counter the likelihood of prices turning negative and further inhibiting inflation and the bank's 2 percent inflation target. "Investors who were optimistic for additional easing are winding down their positions. Prices look like they're about to turn negative, so there's just cause for additional easing. The BOJ is insisting the foundation for prices is still strong. There' s a discord with reality," said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. in Tokyo.

Among exporters, Honda plummeted 6.7 percent to close at 4,041 yen, marking its biggest drop since March 2009, following the automaker forecasting 525 billion yen in profit for the year ending March 2016, well below analysts' estimates.

Imaging and electronics company Ricoh tumbled 9 percent to 1, 250 yen, after saying its group net profit had dropped more than expected for the fiscal year ended March.

NTT Docomo was also among the day's notable decliners, falling 6.1 percent to 2,125 yen, following its profit guidance doing little to inspire investors.

Shin-Etsu Chemical, Japan's largest chemical company, retreated 7 percent to 7,355 yen, after saying its full year net income will come in lower than expected, and Takeda Pharmaceutical lost 2.1 percent to 6,157 yen, following a costly lawsuit in the U. S.

TDK marked a bright spot on the market, however, jumping 4 percent to close at 8,650 yen, following the electronic component maker announcing higher dividend targets this fiscal year.

Trading volume on Thursday rose to 2.71 billion shares on the Tokyo Exchange's First Section, up from Tuesday's volume of 2.08 billion shares, with declining issues beating advancing ones by 1, 464 to 337. Markets here were closed Wednesday for a national holiday. Endit