Japanese Shares Slide as Exporters Drop on Yen While Oil Falls

  • Report on stimulus package’s size is disappointing, Peng says
  • Earnings reports peak this week; Canon, Orix announce today

Japanese stocks fell, tracking a decline in U.S. equities, as exporters dropped with the strengthening yen and oil shares slid on lower crude prices.

The Topix index slipped 1.4 percent to 1,306.94 at the trading close in Tokyo, dropping for a third day. The measure rose in the previous two weeks amid expectations the Bank of Japan will announce fresh stimulus measures when it concludes its meeting on July 29. The Nikkei 225 Stock Average also lost 1.4 percent on Tuesday. The yen gained 1.4 percent to 104.39 per dollar after rising 0.3 percent on Monday. Oil prices fell 2.4 percent in New York yesterday, its lowest level since April 25.

The BOJ’s two-day policy meeting on Friday follows the Federal Reserve’s decision on interest rates a day earlier. Thirty-two of 41 respondents surveyed by Bloomberg News forecast that the BOJ will ease monetary policy this month. The Nikkei newspaper reported that the government plans to double its net fiscal spending to 6 trillion yen ($57 billion). In the U.S., traders’ odds for a rate hike in July fell to 8 percent from 54 percent two months earlier.

“The stock market is losing momentum,” said Ken Peng, an Asian investment strategist at Citi Private Bank in Hong Kong. While Japan’s fiscal stimulus news is good, “the market was looking for more. More in terms of the size. So that’s a bit of a disappointment,” he said.

The number of Japanese companies releasing earnings peaks this week. Firms reporting on Tuesday include Canon Inc. and Orix Corp. Nintendo Co., which slumped 18 percent on Monday after saying the financial impact from its mobile game Pokemon Go will be limited, gained 1.6 percent today ahead of its earnings release on Wednesday.

  • Oil explorer Inpex Corp. sank 3.3 percent
  • Toyota Motor Corp. slipped 2.5 percent, while Honda Motor Co. dropped 1.9 percent.
  • Toshiba Corp. sank 9.3 percent, helping to drag the Topix Electric Appliances Index lower. The industry group contributed the most to the Topix’s decline among the 33 sectors.
  • Mobile giant SoftBank Group Corp. jumped 3 percent. Its beleaguered telecommunications unit Sprint Corp. surged in the U.S. after reporting its sixth straight quarter of subscriber gains.

“A stronger yen and cheaper oil prices are likely to damp investor sentiment,” said Toshihiko Matsuno, a senior strategist with SMBC Friend Securities Co. “Investors are likely to zone in on individual stocks as their respective earnings reports come out.”

Futures on the S&P 500 Index were little changed on Tuesday. The underlying measure lost 0.3 percent on Monday, falling from a record as a tumble in the price of crude sank energy shares with investors looking to central-bank policy decisions later in the week.

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