Japan's Topix Extends Decline to Sixth Day Before U.S. Jobs Data

  • Global shares dropped while Japan's stock market was closed
  • Yen could strengthen after jobs report, Mizuho's Miura says

Japan’s Topix index capped its longest losing streak since January as markets resumed trading after three days of holidays before a U.S. jobs report and as investors watched for signs on whether the government will act to stabilize the yen.

The Topix dropped 0.1 percent to 1,298.32 at the close of trading in Tokyo, bringing its string of declines to six straight days , the longest since a similar stretch through Jan. 12. The Nikkei 225 Stock Average declined 0.3 percent to 16,106.72. During the three days Japan’s stock market was closed, the MSCI All Country World Index slid more than 2 percent. The yen traded at 107.20 per dollar on Friday. The currency strengthened to as much as 105.55 during the holiday, but has reversed much of that move and could see more weakness depending on Friday’s U.S. payrolls data.

“Overseas markets were taking risk off the table while Japan was closed, and so investors are cautious,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. “With the U.S. jobs report coming up, investors are holding back. They’re watching the yen very closely.”

Futures on the S&P 500 lost 0.1 percent after the underlying gauge fell less than 0.1 percent on Thursday ahead of Friday’s employment data. The benchmark index is trading near its lowest level in almost a month.

U.S. Jobs

Data is expected to show that employers added 200,000 new workers to U.S. non-farm payrolls in April, according to analysts surveyed by Bloomberg, with the jobless rate edging down a tenth of a percentage point to 4.9 percent, or close to Federal Reserve’s estimates of full employment. The central bank last month stressed that interest rate hikes are increasingly being driven by data.

The dollar weakened against the yen after Fed officials backtracked on earlier promises for more interest rate hikes, and as the Bank of Japan held back on any action to stem their currency’s strength. The Topix lost 6.1 percent between April 27 and May 2 after the Japanese central bank last week surprised investors by holding off on additional stimulus.

“We’ve got payrolls wedged in the middle of long holidays, so a wait-and-see mood is likely to be strong as neither buyers nor sellers want to take positions,” Yutaka Miura, a senior technical analyst at Mizuho Securities Co, said by phone. “It is positive that the dollar-yen pair didn’t breach the 105 level during the holidays and then rose to 107. The yen strength is seeing a pause. However, that may change after U.S. employment release.”

Japanese Prime Minister Shinzo Abe said Thursday he was ready to respond to excessive currency moves if needed, adding that he may raise the issue of foreign-exchange volatility at a meeting of Group of Seven leaders in Japan later this month.

Sharp Sinks

Sharp Corp. sank 8.5 percent, the most on the Nikkei 225, after the Nikkei newspaper reported the struggling display-maker will post a net loss of 300 billion yen ($2.8 billion) for the year through March, more than the 250 billion yen loss Mainichi newspaper reported last week.

Takata Corp. tumbled 8.6 percent after the U.S. widened recalls of the company’s faulty airbags. The shares closed at a record low of 341 yen.

Carmakers rebounded after two days of heavy selling, with Nissan Motor Co. and Honda Motor Co. gaining at least 2.3 percent. Both automakers lost more than 8 percent over the past two trading sessions.

Airlines rose the most among the Topix’s 33 industry groups, with Japan Airlines Co. climbing 2 percent in response to a drop in oil prices during Japan’s holidays. Oil explorer Inpex Corp. fell 2.8 percent.

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