Japanese shares fell, with the Topix (TPX) index posting its fourth straight monthly loss, as receding prospects of an imminent strike on Syria sent crude lower, dragging down oil stocks while boosting shippers and utilities.
Inpex Corp. fell 2 percent as a Topix subgroup tracking energy explorers pared yesterday’s biggest gain since January. Nintendo Co. extended losses, sinking the most since May after cutting the price of its Wii U video-game console. Nippon Yusen K.K. led shipping companies to the biggest gain on the gauge on prospects for lower fuel costs. Hokkaido Electric Power Co. rose 3.5 percent after forecasting a narrower loss.
The Topix slipped 0.9 percent to 1,106.05 at the close of trading in Tokyo, extending its weekly drop to 3.1 percent. The gauge fell 2.3 percent in August, capping its longest monthly losing streak since November 2008. The Nikkei 225 Stock Average slid 0.5 percent to 13,388.86.
“There’s some end-of-month profit-taking going on,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which has the equivalent of $360 billion in assets. “The U.K. and U.S. have backed down slightly over Syria, so crude prices fell and that’s helping shipping stocks and utilities, while oil stocks drop.”
Even after falling for half of the year to date, Japanese equities are still the best performers in 2013 among developed markets, amid optimism Prime Minister Abe and the Bank of Japan can lead the country out of deflation through unprecedented monetary easing and regulatory reforms.
Data today showed Japan’s consumer prices, excluding fresh food, increased 0.7 percent in July from a year earlier. The median estimate of economists surveyed by Bloomberg was for a 0.6 percent advance. Industrial production rose 3.2 percent in July on the previous month, after falling 3.1 percent in June, according to the Statistics Bureau. Analysts projected a 3.6 percent gain.
“The street believes the market has limited downside but is still waiting for Prime Minister Shinzo Abe and his structural reforms before it gets too bullish again,” said Stuart Beavis, head of institutional equity derivatives at Vantage Capital Markets in Hong Kong.
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent. The gauge yesterday rose for a second day as data showed U.S. gross domestic product increased at a 2.5 percent annualized rate in the second quarter, up from an initial estimate of 1.7 percent. The median forecast of economists surveyed by Bloomberg was for a 2.2 percent gain. Separately, jobless claims dropped more than forecast.
The prospect of imminent strikes on Syria receded after U.K. Prime Minister David Cameron failed to get parliamentary approval for military action. The U.S., which says it has evidence that Syria’s government was responsible for chemical-weapons attacks, won’t act without allies, Defense Secretary Chuck Hagel said yesterday.
West Texas Intermediate crude oil fell 0.9 percent today, dropping for a second day after declining from a two-year high yesterday.
A gauge tracking energy explorers retreated from a seven-month high today, while the Topix Oil & Coal Index lost 1.7 percent. Inpex slumped 2 percent to 445,500 yen after the oil producer yesterday surged by the most since Jan. 29. Cosmo Oil Co. sank 2.9 percent to 203 yen.
Just three of the 33 Topix subgroups advanced today. The Topix Marine Transportation Index rose 0.9 percent for the biggest gain, as lower crude prices buoyed Japan’s largest shippers. Nippon Yusen gained 2.1 percent to 280 yen. Kawasaki Kisen Kaisha Ltd. climbed 0.9 percent to 222 yen.
Utilities, which rely more on imported oil and gas as most of Japan’s nuclear reactors remain offline, were the No. 2 gainers on the Topix today after crude extended its drop.
Hokkaido Electric Power Co. jumped 3.5 percent to 1,154 yen. The Sapporo-based company was also boosted after projecting a first-half loss of 1 billion yen versus 48.6 billion yen a year earlier. Kansai Electric Power Co. (9507), Japan’s biggest electricity producer by market value, increased 1.8 percent to 1,103 yen.
“The impact on the market will be large if military intervention in Syria proceeds and other Middle Eastern countries get involved, but at the moment it doesn’t seem the risk is increasing,” said Juichi Wako, a Tokyo-based equity market strategist at Nomura Securities Co., the nation’s biggest brokerage.
Among other stocks that fell, Nintendo tumbled 6.1 percent to 11,120 yen, extending yesterday’s decline after announcing it would reduce the price of its Wii U console by $50. The cut comes as it attempts to boost sales in the months before competing products are released by Sony Corp. and Microsoft Corp.
Japanese companies, sitting on a record 137 billion yen in cash, were the biggest net buyers of domestic shares last week among institutional investors, according to data from the Tokyo Stock Exchange. Businesses bought 54 billion yen more in shares than they sold, compared with 29 billion yen in net purchases by investment trusts and net selling of 20 billion yen by financial institutions.
In the first half of this year, Topix companies repurchased 1.78 trillion yen of their own shares, the most since 2005, according to data compiled by Bloomberg.
The Topix traded at 1.15 times book value today, compared with 2.41 for the S&P 500 and 1.69 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 26.63 today, compared with its five-year median of 19.42.
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