Japanese shares fell, with the Topix (TPX) index posting its first weekly decline since mid-May, amid concern the Federal Reserve will raise rates sooner than expected and as the yen gained on disappointing U.S. data.
Canon Inc. (7751), the world’s biggest camera maker, slid 1.9 percent. NOK Corp. slumped 2 percent after Bank of America Corp.’s Merrill Lynch unit cut its rating on the autoparts maker. Ono Pharmaceutical Co. advanced 5 percent on a report the health ministry will approve its melanoma drug.
The Topix lost 0.8 percent to 1,253.15 at the close in Tokyo, posting a 1.2 percent slide this week. The gauge is set for a 4.3 percent advance this month. The Nikkei 225 Stock Average slid 1.4 percent today to 15,095. The yen gained 0.4 percent to 101.36 per dollar today, extending yesterday’s advance.
“A lot of investors are concerned about the short-term overheating of the market, which is acting as a disadvantage for Japan,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees the equivalent of $32.1 billion. “The U.S. economy isn’t strong enough yet for an interest-rate hike. There are expectations that the dovish ones will oppose an increase.”
The Topix has rebounded 9 percent from its May 21 low, while the MSCI World Index advanced 3.1 percent in the period. Prime Minister Shinzo Abe said deflation has ended and will be thwarted by new government policies designed to encourage business expansion.
The 14-day Relative Strength Index on the Topix, which rose as high as 74.5 on June 20, was 61 at today’s close. The Japanese measure traded at 1.2 times book value today, compared with 2.7 for the Standard & Poor’s 500 Index and 1.9 for the Stoxx Europe 600 Index yesterday. Volume was 22 percent above the 30-day average for the Topix.
Futures on the S&P 500 slid 0.2 percent today. The measure dropped 0.1 percent yesterday after economic data showed U.S. consumer spending rose 0.2 percent in May, missing economist forecasts for a 0.4 percent advance. U.S. jobless-benefit claims fell less than estimated last week.
James Bullard, president of the Federal Reserve Bank of St. Louis, suggested that interest rates may rise sooner than people thought. Bullard favors raising the benchmark rate in the first quarter next year.
“Until now, the expectation had been that U.S. consumption increases, which helps Japanese exports to grow,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “We can’t expect that now. It’s negative for Japanese shares.”
Canon, which gets about 80 percent of its sales abroad, lost 1.9 percent to 3,277 yen. Sony Corp., which gets about 70 percent abroad, slid 1.4 percent to 1,679 yen. Nissan Motor Co., which counts North America as its biggest market for sales, slid 1.1 percent to 959 yen.
NOK sank 2 percent to 1,990 yen, the steepest drop since May 7. Merrill Lynch reduced its rating to neutral and set its price target at 2,100 yen.
Ono Pharmaceutical jumped 5 percent to 8,980 yen after national broadcaster NHK said the health ministry will approve its drug for treatment of melanoma, and the product may be distributed by year-end.
Data today showed Japan’s inflation climbed at the fastest pace in 32 years, swelled by April’s consumption-tax hike and higher utility charges. Consumer prices excluding fresh food rose 3.4 percent from a year earlier in May, matching expectations of economists surveyed by Bloomberg.
To contact the reporter on this story: Anna Kitanaka in Tokyo at email@example.com