/ |

Tokyo stocks drop further amid wait-and-see mood

JIJI

Stocks lost further ground on the Tokyo Stock Exchange Wednesday, hurt by selling on the back of the yen’s early strength and a fall in crude oil prices, with investors sitting on the fence ahead of a U.S. monetary policy decision.

The 225-issue Nikkei average fell 142.62 points, or 0.83 percent, to end at 16,974.45. On Tuesday, the key market gauge sagged 116.68 points.

The Topix index of all first-section issues dropped 11.58 points, or 0.84 percent, to 1,360.50, after falling 7.87 points the previous day.

Tokyo stocks met with selling from the outset of Wednesday’s trading, affected by the yen’s ascent against the dollar and lower crude oil futures in New York.

After the initial selling ran its course, however, the Nikkei average trimmed losses thanks to buying on dips on hopes for a further rebound in stock prices, brokers said.

A wait-and-see mood intensified in the afternoon before the results of the U.S. Federal Reserve’s two-day Federal Open Market Committee meeting come out later on Wednesday, brokers said.

Selling was limited in the afternoon thanks to some buyback of beaten-down issues, reflecting a halt to the yen’s strengthening.

Investor sentiment was also supported by expectations that the Japanese government may postpone again the planned consumption tax hike from 8 percent to 10 percent, now scheduled for April 2017, after a renowned U.S. economist indicated a negative stance toward the tax hike at a meeting in Tokyo on Wednesday of a government-appointed panel to discuss global economic conditions, brokers said.

Meanwhile, most analysts believe that the Fed will put off an interest rate hike at the latest meeting in view of the recent lackluster economic situation in the United States.

“Investors are paying close attention to (Fed Chair Janet) Yellen’s news conference and the FOMC statement. They want to know the pace of expected interest rate hikes,” said Hiroaki Hiwada, strategist at Toyo Securities Co. Yellen is slated to hold a news conference after the meeting.

Falling issues outnumbered rising ones 1,340 to 486 in the TSE’s first section, while 118 issues were unchanged.

Volume decreased to 1.86 billion shares from Tuesday’s 2.09 billion shares.

Sharp tumbled 11.84 percent following news on Tuesday that Taiwan’s Hon Hai Precision Industry may delay the signing of a deal to acquire the ailing Japanese electronics maker.

In the financial sector, mega-bank groups Mitsubishi UFJ and Sumitomo Mitsui and brokerage firm Nomura were downbeat.

Also on the minus side were steel makers Nippon Steel & Sumitomo Metal, Kobe Steel and JFE Holdings.

By contrast, Sony surged 3.19 percent on growing hopes for a virtual reality headset for playing home video games, which will be released by Sony Computer Entertainment Inc. in October in Japan and other countries, brokers said.

JAL and ANA Holdings gained ground, backed by sluggish crude oil prices.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average fell 150 points to close at 16,810.