Stocks shed earlier gains to close lower in thin trading on the Tokyo Stock Exchange on Thursday, with investors retreating to the sidelines to see the results of the Bank of Japan’s two-day monetary policy meeting through Friday.
The Nikkei lost 122.47 points, or 0.71 percent, to end at 17,041.45. On Wednesday, it surged 455.02 points.
The Topix closed down 8.60 points, or 0.61 percent, at 1,392.10, after rising 40.47 points the previous day.
The market opened weaker after U.S. equities retreated on Wednesday. Investors were worried about an interest rate hike by the Federal Reserve in March as a Fed statement issued the same day after a policy-setting Federal Open Market Committee meeting maintained its bullish stance on the U.S. economy, brokers said.
Sluggish U.S. corporate earnings released Wednesday also pressured stocks in Tokyo, brokers said, briefly pushing the Nikkei down about 220 points.
After the initial selling ran its course, Tokyo stocks gradually cut their losses thanks to buying on dips prompted in part by the yen’s weakening and relatively solid Chinese stocks. The key market gauges briefly popped up into positive territory in the late morning session.
In the afternoon, however, stocks lost stream again, with the key market gauges slipping back into negative territory amid a growing wait-and-see mood.
“It was difficult for investors to activate buying or selling before the key meeting,” said Hiroaki Hiwada, strategist at Toyo Securities Co., referring to the BOJ Policy Board’s meeting. In addition, mixed movements of Chinese stocks in the afternoon made it more difficult for investors to trade, he added.
Regarding the BOJ meeting, Hiwada said that as investors are pinning hopes on additional monetary easing, any policy decision or remarks by BOJ Governor Haruhiko Kuroda suggesting such measures will be the key to a rise in Tokyo stocks.
But an official of a bank-affiliated securities firm warned that if no additional monetary easing comes out of the meeting, the market could be hit by selling on disappointment.
Falling issues outnumbered rising ones 1,095 to 753 in the TSE’s first section, while 87 issues were unchanged.
Volume fell to 2,145 million shares from Wednesday’s 2,257 million shares.
Electronics parts maker Alps Electric dived 17.42 percent, a day after revising down its earnings estimates for the current fiscal year through March on the back of sluggish demand for iPhone parts.
Other iPhone parts suppliers, such as Murata Manufacturing, TDK, Minebea and Nitto Denko, also met with selling.
Following a sluggish earnings report from U.S. aircraft maker Boeing, parts suppliers Mitsubishi Heavy and textile maker Toray lost ground.
Other major losers included mobile phone carrier Softbank Group and clothing store chain operator Fast Retailing, both heavily weighted components of the Nikkei average.
Meanwhile, semiconductor-related Advantest surged after revising up its operating profit estimate for the current fiscal year.
Automakers Toyota and Suzuki, as well as Daihatsu were also buoyant.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average finished down 110 points at 17,060.