Japan’s Topix Index Falls After Longest Rally Since 2009

Japan’s Topix (TPX) index fell for the first time in 11 days, after the measure posted its longest winning streak in almost five years, as the yen strengthened and insurance companies led declines.

Astellas Pharma Inc., a drugmaker that gets more than half its sales outside Japan, was the biggest drag on the Topix. T&D Holdings Inc. lost 2.2 percent to lead insurers lower. Sapporo Holdings Ltd. fell the most on the Nikkei 225 Stock Average after the brewer said it may incur 11.6 billion yen ($113 million) in extra taxes. Asahi Group Holdings Ltd., another beermaker, posted a record closing high after announcing a share buyback.

The Topix dropped 0.1 percent to 1,232.75 at the close of trading in Tokyo, reversing an earlier gain of 0.4 percent, with about as many shares falling as rising. The measure’s 0.4 percent advance yesterday extended its rally to a 10th day, the longest stretch since August 2009. The Nikkei 225 climbed 0.1 percent to 15,079.37. The yen strengthened 0.2 percent to 102.53 per dollar after weakening for a third day yesterday.

“The Topix is the worst regional performer this year to date and yes, we’ve seen a long winning streak, but we doubt a total reversal of the rally is on the cards,” said Gavin Parry, managing director of Hong Kong-based brokerage Parry International Trading. For today’s intraday moves, “we’re back to the tail, or the yen, wagging the dog.”

The Topix’s 14-day Relative Strength Index rose to 70.5 yesterday, the highest since Dec. 30 when the measure closed at a 5 1/2-year peak. It fell to 69.7 at the close today. A reading above 70 indicates to some traders that shares have risen too far, too fast.

Leaving Peaks

Astellas, which rose to a record high yesterday, fell 1.5 percent to 1,339 yen. Nippon Telegraph & Telephone Corp., which reached its highest close in seven years yesterday, sank 1 percent to 6,214 yen. T&D Holdings slid 2.2 percent to 1,344 yen today, erasing yesterday’s 2 percent advance.

Futures on the Standard & Poor’s 500 Index were little changed today after the measure rose to a record again yesterday. U.S. service industries expanded in May at the fastest pace in nine months as orders picked up, according to the Institute for Supply Management’s non-manufacturing index.

Labor Department data on U.S. employment tomorrow may show private payrolls, which exclude government agencies, increased 210,000 in May after a 273,000 gain in April, according to the median estimate in a Bloomberg survey.

U.S. Payrolls

“If U.S. non-farm payrolls are above 200,000, U.S. yields are likely to rise and that’ll help Japanese stocks,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees the equivalent of $32.1 billion. “The rising streak is causing stocks to look overheated, so gains will be limited.”

Investors are also watching data from Europe before a meeting of central bank policy makers. Euro-area economic growth slowed in the first quarter, while a separate report showed services expanded last month at the strongest pace in three years.

Asahi gained 5.4 percent to 3,109 yen, its highest close since listing in 1974. Japan’s biggest beverage producer by market value will spend as much as 50 billion yen to buy back as much as 4.32 percent of outstanding shares, the company said.

Sapporo tumbled 6.6 percent to 426 yen, the most in almost a year. The company may pay the additional taxes on reclassifying its “Goku Zero” beer-like drink to a happoshu low-malt beer, from its current classification as a third-category alternative beer, it said.

Monetary easing and government spending drove a world-beating 51 percent jump for the Topix in 2013. The index fell 5.3 percent this year, the most among 24 developed markets tracked by Bloomberg, amid concern the measures won’t be enough to revive the economy.

The gauge traded at 1.20 times book value today compared with 2.69 for the S&P 500 and 1.90 for the Stoxx Europe 600 Index yesterday. Volume on the Topix was about 4 percent higher than the 30-day average today.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond

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