Stocks dropped on the Tokyo Stock Exchange on Wednesday after struggling for direction for the majority of the day, ahead of a monetary policy decision by the U.S. Federal Reserve.
The 225-issue Nikkei average fell 40.61 points, or 0.18 percent, to end at 21,960.71, falling for the first time in 11 market days. On Tuesday, the key market gauge gained 13.03 points.
The Topix index of all first-section issues dropped 7.96 points, or 0.49 percent, to 1,606.62, after rising 4.71 points the previous day.
The Nikkei opened slightly higher thanks to an overnight rise in U.S. stocks, but then slipped into negative territory.
The U.S. market rebounded on the back of waning concerns over crude oil supply, after Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said Tuesday that oil production in the country that took a big hit from Saturday’s attacks on crude oil facilities will be fully restored by the end of the month.
The Nikkei fluctuated around Tuesday’s closing level for the rest of the morning, before moving narrowly under the level in the afternoon, as investors waited for the outcome of the Fed’s two-day Federal Open Market Committee meeting, which will end later on Wednesday.
Meanwhile, the Topix index started off on the minus side, where it remained for the entire day.
“The Nikkei came under profit-taking after the index advanced for 10 consecutive sessions and rose above 22,000,” said Hirohumi Yamamoto, strategist at Toyo Securities Co.
Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co., noted that the market has already discounted an interest rate cut of 0.25 percentage point by the Fed.
He added that investors are focusing on a Fed statement to be issued after the FOMC meeting to analyze whether it will continue cutting interest rates as well as its economic outlook.
Falling issues outnumbered rising ones 1,466 to 602 in the first section, while 82 issues were unchanged.
Volume dropped to 1.221 billion shares from Tuesday’s 1.336 billion shares.
Oil names plunged after Tuesday’s fall in crude oil futures amid easing concerns over crude oil supply. Idemitsu dropped 4.24 percent and Inpex 4.22 percent.
Sony fell 2.22 percent, after the technology giant released an open letter on Tuesday rejecting a proposal by U.S. hedge fund Third Point LLC that the company should spin off its semiconductor business.
Also on the negative side were chipmaking equipment-maker Tokyo Electron and technology investor SoftBank Group.
On the other hand, airline JAL rose 0.24 percent due to the drop in crude oil futures.
Among other major winners were clothing store chain Fast Retailing and job information service firm Recruit Holdings.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average fell 10 points to end at 21,800.