Japanese Stocks Fall a Third Day, Led by Developers and Builders

Kuroda: Japan Continued Moderate Recovery Trend
  • Yen rises third day on Fed’s cautious tone about rate hikes
  • Expected further currency gains weighing on stocks: Akino

Japanese stocks fell a third day, erasing earlier gains, as real estate and construction companies led declines.

The Topix index retreated 0.7 percent to 1,226.09 at the close in Tokyo after rising as much as 0.4 percent. The measure lost 1.8 percent on Wednesday, its biggest drop since the 7.3 percent plunge after the U.K.’s decision to leave the European Union. The Nikkei 225 Stock Average slumped 0.7 percent on Thursday.

The yen climbed for a third day to near its highest since November 2013 after minutes from the Federal Reserve showed less urgency to tighten interest rates given the uncertainty over the global economic outlook, sapping demand for the dollar. The Japanese currency traded at 100.72 against the greenback on Thursday.

“Without an interest rate increase from the U.S., and given that there’s a limit to how much effect monetary policy in Japan can have, the market is now expecting the yen to climb to 95 per dollar,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “That’s going to put a limit on gains” in Japanese stocks.

Futures on the S&P 500 Index slid 0.1 percent on Thursday. The underlying U.S. equity gauge added 0.5 percent on Wednesday. U.S. central bankers want proof that job creation has resumed a healthy pace, and that the underlying momentum of the economy was intact. That’s according to minutes of a meeting held the week before Britain’s June 23 vote to leave the European Union, which has further clouded the outlook.

“Yes, there are concerns over a global economic slowdown,” said Keita Kubota, an investment manager at Aberdeen Investment Management K.K. “When asset prices start falling, you can’t avoid economic expansion reversing.”

Real estate developers and construction stocks led declines among the 33 Topix industry groups, while only five sectors gained.

  • Aeon Co. fell 8.2 percent, the most on the Nikkei 225. The supermarket operator swung to a loss in the first quarter from a year ago.

  • Yamato Holdings Co. rose 3.6 percent. Mitsubishi UFJ Morgan Stanley Securities Co. raised its rating to overweight, saying it’s now poised to book a string of record profits as a rapid expansion in online second-hand good sales boosts demand for parcel deliveries. 

  • Telecommunication companies were the biggest drag on the Topix. KDDI Corp. dropped 2 percent, weighing the most on the Nikkei 225, while SoftBank Group Corp. lost 1.5 percent.

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